Unlocking the Tax Changes: Key Updates for 2025/26

👶 Neonatal Care Leave and Pay: What UK Parents Need to Know in 2025

Starting in April 2025, the UK government is introducing Neonatal Care Leave and Pay, a long-awaited employment right designed to support parents of babies who require neonatal care after birth. This new statutory entitlement offers additional paid leave to help parents stay close to their babies during critical early weeks in hospital.

Whether you're an employee preparing to welcome a child, an HR professional updating company policies, or an employer managing statutory leave, here’s everything you need to know about Neonatal Care Leave and Pay in 2025.

What Is Neonatal Care Leave?

Neonatal Care Leave is a new statutory right that allows eligible parents to take up to 12 weeks of additional leave if their baby is admitted to neonatal care (specialist medical care for newborns) shortly after birth.

This leave is separate from maternity, paternity, or shared parental leave, and is available to both mothers and fathers, as well as adoptive parents and partners.

What Is Neonatal Care Pay?

Eligible employees will receive Statutory Neonatal Care Pay during their leave, paid at the same standard rate as other family-related statutory payments (e.g. Statutory Paternity Pay):

• In 2025, this rate is expected to be £184.03 per week or 90% of average weekly earnings, whichever is lower.

Who Is Eligible?

To qualify for Neonatal Care Leave and Pay:

• The baby must be admitted to hospital for neonatal care within 28 days of birth.
  

• The baby must stay in neonatal care for at least 7 consecutive days.
  

• The parent must be an employee with at least 26 weeks of continuous service with their employer by the end of the qualifying week.
  

• The parent must earn at least the Lower Earnings Limit (LEL) for National Insurance (currently £123 per week in 2025).

Key Features of Neonatal Leave and Pay

• ✅ Up to 12 weeks of leave per parent, per baby.
  

• ✅ Leave must be taken within 68 weeks of the child’s birth.
  

• ✅ It is in addition to maternity, paternity, or shared parental leave.
  

• ✅ Pay applies only to eligible employees; others may still take unpaid neonatal leave.
  

• ✅ Notice and evidence requirements apply, but will be kept minimal to reduce burden on parents.
  

Why This Matters

• For Parents: Offers vital emotional and financial support during stressful times when a baby needs specialist care.

• For Employers: New rights mean updating HR policies, payroll systems, and leave tracking processes.

• For HR Teams: Essential to train managers and support staff to ensure a compassionate and compliant response.
  

How to Prepare

🧾 For Employees:

• Understand your rights and eligibility in advance.

• Keep documentation (e.g. hospital letters or admission notes) ready for leave applications.
  

🏢 For Employers:

• Update your employee handbook and HR policies to reflect neonatal care leave entitlements.

• Ensure your payroll system can process Statutory Neonatal Pay.

• Train HR and line managers on the new rules to support affected employees empathetically.
  

Neonatal Care Leave and Pay is a landmark step in UK employment law, offering essential support to families when they need it most. By understanding the eligibility criteria, entitlements, and responsibilities, both employers and employees can ensure a smooth transition into this new benefit and foster a more compassionate workplace culture.

🧮 Salary Sacrifice Pension Schemes: A 2025 Guide for Employers and Employees

Salary sacrifice pension schemes are a popular, tax-efficient way for UK employees and employers to boost pension contributions. With continued emphasis in 2025 on long-term financial wellbeing and workplace benefits, salary sacrifice remains a smart option for both saving for retirement and reducing tax and National Insurance liabilities.

Whether you’re an HR professional, payroll manager, or employee looking to understand your benefits, this guide breaks down everything you need to know.

What Is a Salary Sacrifice Pension Scheme?

A salary sacrifice pension scheme is an arrangement where an employee agrees to give up part of their gross salary. In exchange, the employer contributes the equivalent amount directly into the employee’s pension.

Instead of taking a portion of income and paying into a pension after tax and NIC, employees make this "sacrifice" before tax, resulting in NI and tax savings.

How It Works – Example

An employee earning £30,000 sacrifices £1,500 of their salary. Their new gross salary is £28,500, and the employer pays the £1,500 directly into the pension.

• The employee pays less Income Tax and National Insurance.

• The employer pays lower Employer NICs, and may reinvest those savings into the pension too.
  

Key Benefits in 2025

✅ Increased Take-Home Pay
Employees keep more of their earnings by reducing their tax and NIC bill.

✅ Boosted Pension Contributions
Employers can contribute their NIC savings to further enhance pension pots.

✅ Attractive to Employers
Helps recruit and retain talent, demonstrating a commitment to long-term financial wellbeing.

✅ No Change in Take-Home Pay (if designed that way)
Some employers “convert” standard contributions to salary sacrifice, keeping net pay the same while boosting pensions.

2025 Updates and Considerations

• HMRC Compliance Remains Crucial
  Employers must ensure arrangements meet HMRC rules and employment contract adjustments are legally valid.
  

• Minimum Wage Impact
  Salary sacrifice cannot reduce gross pay below the National Minimum Wage. This is especially important with the increased National Living Wage in 2025.
  

Communication Is Key
Employers must clearly explain to staff how salary sacrifice works, including potential impact on:

• Mortgage applications (due to reduced gross pay)
  

• Statutory payments (e.g. SMP, SSP, redundancy pay)
  

• Death-in-service benefits (if calculated on reduced salary

  Auto-Enrolment Compatibility

• Salary sacrifice must be optional and clearly documented to comply with auto-enrolment laws.
  
  

Is Salary Sacrifice Right for You?

💼 For Employers:

• Reduces Employer NIC

• Offers a low-cost way to enhance total reward packages

• Must ensure payroll software supports it correctly
  
  

👩‍💼 For Employees:

• Increases pension savings and take-home pay

• May impact statutory pay and financial assessments (e.g. loans)

• Must understand the trade-offs before opting in
  

In 2025, salary sacrifice pension schemes continue to be one of the most effective ways to save for retirement in a tax-efficient manner. With proper implementation, communication, and compliance, both employees and employers can benefit significantly.

💼Non-Dom Tax Regime Abolition in 2025: What High-Net-Worth Individuals Need to Know

In a major shift to the UK tax system, the government has announced the abolition of the "Non-Domiciled" (Non-Dom) tax regime, effective from April 2025. This marks the end of long-standing tax benefits for UK residents with foreign domiciles, aiming to create a more equitable system while preserving the UK’s global financial appeal.

This change has significant implications for high-net-worth individuals (HNWIs), international families, and UK residents with overseas income or assets.

🌍 What Was the Non-Dom Tax Regime?

The non-dom tax regime allowed individuals who lived in the UK but were legally domiciled elsewhere to:

• Be taxed on their UK income and gains,
  

• But exempt their foreign income and gains from UK tax if not brought into the UK (known as the remittance basis),
  

• And delay or reduce their UK tax exposure.
  

Many wealthy individuals used this to live and work in the UK while minimizing taxes on their global wealth.

🔁 What’s Changing in 2025?

Starting 6 April 2025, the UK will:

1. Abolish the Non-Dom Regime Entirely
   The remittance basis of taxation will no longer apply.
   
   

2. Introduce a New 4-Year Foreign Income Exemption
   New UK residents (regardless of domicile) will benefit from a 4-year tax exemption on foreign income and gains (FIGs). This is designed to keep the UK attractive to mobile international talent.
   
   

3. Transitional Reliefs for Existing Non-Doms
   Those who were previously non-doms may access:
   

   • Rebasing relief: Uplift in asset values to April 2019 levels.
     

   • Temporary repatriation relief: Bring foreign income/gains into the UK at a reduced tax cost.
     

   • Transitional arrangements will apply until April 2027.
     
     

4. Abolish Overseas Workday Relief (OWR) After 2025
   OWR, a popular tax break for UK-based workers employed abroad, will be phased out with the non-dom regime unless adapted for use in the new system.
   

⚖️ Who Will Be Affected?

• Current non-doms living in the UK who rely on the remittance basis.

• Wealthy expats, entrepreneurs, and investors with significant overseas assets or income.

• Non-UK domiciled individuals planning to relocate to the UK.

• Family offices and trusts using offshore structures for tax efficiency.

📋 What Should You Do Now?

For Individuals:

• Review your residency and tax status with a qualified tax advisor.

• Consider restructuring overseas assets to reduce future tax exposure.

• Evaluate whether bringing money into the UK before 2025 could trigger lower tax under transitional relief.
  
  

For Advisors and Trust Managers:

• Help clients model the long-term UK tax implications of becoming fully subject to worldwide income and gains.
  

• Plan for the loss of protections on offshore trusts created by non-doms.
  

• Stay updated on HMRC guidance and draft legislation.

✅ Opportunities in the New System

While the regime is being tightened, the 4-year exemption for new arrivals may still attract international entrepreneurs and investors. Those planning to move to the UK in 2025 or later can optimize timing to take full advantage of the grace period.

The abolition of the Non-Dom tax regime in 2025 represents a fundamental change in how the UK taxes international wealth. While it's part of a broader push toward fairness and transparency, it will require careful financial planning for those previously relying on the remittance basis. Acting early is key to adapting and making the most of transitional reliefs and new exemptions.

👶 Statutory Maternity Pay (SMP) and Statutory Paternity Pay (SPP) Rates for 2025/26

Starting 6 April 2025, the UK government has updated the rates for Statutory Maternity Pay (SMP) and Statutory Paternity Pay (SPP) for the 2025/26 tax year. These changes aim to support working parents and ensure that statutory pay aligns with current economic conditions.

💷 Statutory Maternity Pay (SMP)

• First 6 weeks: 90% of the employee’s average weekly earnings.
  
  

• Remaining 33 weeks: £187.18 or 90% of the employee’s average weekly earnings, whichever is lower.

Employees must meet specific eligibility criteria, including having been employed by the same employer for at least 26 weeks by the end of the qualifying week and earning at least £125 per week (up from £123 in the previous year).

👨‍👩‍👧 Statutory Paternity Pay (SPP)

• Weekly rate: £187.18 or 90% of the employee’s average weekly earnings, whichever is lower.

Eligible employees can take up to two weeks of paternity leave, and the pay is available to fathers, partners, and intended parents in surrogacy arrangements.

These rates apply to both SMP and SPP, as well as to Statutory Adoption Pay (SAP), Statutory Shared Parental Pay (ShPP), Statutory Parental Bereavement Pay (SPBP), and Statutory Neonatal Care Pay (SNCP) .(GOV.UK)

🧾 Qualifying Criteria

To qualify for SMP or SPP, employees must meet the following criteria:

• Earnings Threshold: Earn at least £125 per week (up from £123 in the previous year) .
  
  

• Employment Duration: Have been employed by the same employer for at least 26 weeks by the end of the 15th week before the expected week of childbirth (for SMP) or the week in which the child is placed for adoption (for SAP).
  
  

• Notification: Provide the employer with the correct notice and evidence, such as a MATB1 certificate for SMP.(Kea HR Solutions, GOV.UK, PAYadvice.UK)

💰 Small Employers Relief (SER)

For employers with a Class 1 National Insurance contributions liability of £45,000 or less in the previous tax year, they may be eligible for Small Employers Relief (SER). This allows them to recover 108.5% of the SMP or SPP paid to employees, up from the previous rate of 100% .(Attwells Solicitors)

🗓️ Implementation Timeline

These changes will come into effect on 6 April 2025 and will apply throughout the 2025/26 tax year. Employers should update their payroll systems accordingly to ensure compliance with the new rates and thresholds.

📌 Additional Notes

• Maternity Allowance: For self-employed individuals or those who don't qualify for SMP, Maternity Allowance is available. The weekly rate is the same as SMP, and the qualifying criteria are similar.
  
  

• Other Statutory Payments: The rates for Statutory Adoption Pay, Statutory Shared Parental Pay, Statutory Parental Bereavement Pay, and Statutory Neonatal Care Pay will also increase to £187.18 per week, aligning with the new SMP and SPP rates.(GOV.UK)
  

For more detailed information and resources, employers can refer to the official GOV.UK guidance on statutory payments.(GOV.UK)

If you need assistance with implementing these changes in your payroll system or have further questions, feel free to ask!