Payroll Bulletin Q2 2025

As your trusted payroll adviser, we have prepared a summary of key changes affecting payroll by jurisdiction. These highlights are not exhaustive, so please get in touch if you need further details at payroll@offshoregroup.gg.

Payroll Updates - UK

The second quarter of 2025 marks the beginning of the UK Tax Year, bringing the following key changes:

Employer National Insurance Changes (Effective 6 April 2025):

• Employer Class 1 NIC will increase from 13.8% to 15%. This rate also applies to Class 1A and Class 1B NICs, which cover expenses and benefits provided to employees.
  

• The secondary NIC threshold will decrease from £9,100 per year to £5,000 per year, making more of an employee's salary subject to NIC. Subsequently, the threshold will increase in line with Consumer Price Inflation.
  

• The Employment Allowance (EA) will see significant changes. Currently, it is limited to employers with NIC bills under £100,000, but this restriction will be removed. The maximum EA amount will increase from £5,000 to £10,500.
  

Salary Sacrifice Opportunities:

• Given the higher Employer NIC contributions, Salary Sacrifice (pension) schemes are becoming an attractive option for businesses. We recommend discussing your options with your pension provider.
  

Personal Allowances & Employee NIC:

• Personal allowances will remain frozen at £12,570 until 2028.

• Employee National Insurance remains at 8%.
  

Benefits in Kind (BIK) Reporting Changes:

• This is the final year for submitting BIK via P11D forms. From April 2026, all BIK must be payrolled. Common benefits in kind include:
  

  • Company cars

  • Private medical insurance

  • Personal bills
    

Payroll Updates - Isle of Man

As the Isle of Man enters a new tax year in April 2025, the following key changes will take effect:

Income Tax Changes:

• The higher income tax rate will be reduced from 22% to 21%.
  

• The personal allowance will increase by £250 to £14,750 for individuals and £29,500 for jointly-assessed couples (an increase of £500).
  

• The tax cap will increase to £220,000 per year from April 2025.

National Insurance (NI) Threshold Adjustments:

• Class 1 NI primary and secondary thresholds, along with the Class 4 lower profits limit, will increase from £8,320.80 to £8,736 (and from £6,396 to £6,500).

  
  

• Class 1 NI upper earnings limit and Class 4 upper profits limit will increase from £48,776 to £53,664 per annum.

  
  

• There will be no increase in Employer NIC contributions.

  
  

Other Updates:

• New tax coding will be issued in April 2025 and should be updated in payroll systems.

  
  

• IOM annual payroll reports (T37, T14, T09) are due by 5 May 2025.

Payroll Updates - Guernsey

Guernsey’s payroll landscape remains stable, with no key changes since the beginning of 2025.

Payroll Updates - Jersey

Similarly, Jersey has seen no significant payroll changes since early 2025.

For further details on how these updates may impact your business, please reach out to our team at payroll@offshoregroup.gg. We are here to help you navigate these changes and ensure compliance with evolving payroll regulations.