Treat Your Business

124 National Insurance and Minimum Wage Updates - What You Need to Know

• Katie Bell • Season 1 • Episode 124

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If you employ a team in your clinic or are considering moving to an employed model, this episode is packed with valuable insights. Grab your calculator and a cup of tea, and let’s break down the latest changes impacting clinic owners like you.

📋 Episode Summary
In this episode, we explore the recent changes to the national minimum wage increase and employer National Insurance contributions. These updates might feel overwhelming, but we’ll simplify what they mean for your clinic. From understanding the true costs of employing staff to calculating their return on investment, this episode equips you with the tools and strategies to maintain profitability. We also discuss the pros and cons of employing staff versus working with freelancers and how to navigate employment law changes to protect your business. Whether you’re just starting to build your team or managing an established clinic, this episode is full of actionable advice to help you make confident decisions.

✨ Key Takeaways

  • National Insurance Contributions: Employer contributions have increased to 15%, with a reduced threshold of £5,000 per employee, but an increased employer’s allowance of £10,500.
  • Minimum Wage Increase: A 6.7% rise for over-21s means higher wage bills. Learn how to budget for this and review your pay structures effectively.
  • Employment vs Freelance: Weighing the benefits of employing staff versus hiring freelancers, especially in light of upcoming changes to employment laws.
  • Performance Metrics: Why it’s crucial to measure staff performance from day one and set clear goals for a profitable clinic.
  • Non-Monetary Benefits: Consider flexible working, CPD allowances, and bonus schemes to attract and retain top talent.

🔗 Resources & Links

  • Employer National Insurance Calculator: Thrive members can access this tool in the member area to calculate employee costs.
  • Upcoming HR Webinar: Stay tuned for details on our webinar covering employment law changes and recruitment tips.

Sponsored by Nookal
This episode is proudly sponsored by Nookal, the leading practice management software designed to streamline operations and empower Allied Health clinics. Visit No

Treat Your Business podcast is proudly sponsored by MBST, the groundbreaking technology revolutionising recovery and rehabilitation. Offering a non-invasive, drug-free solution for musculoskeletal conditions and nerve injuries, MBST works at a cellular level to stimulate regeneration. Expand your services and deliver long-term patient improvements without increasing your workload.

Learn more at mbstmedical.co.uk. 

Katie Bell: [00:00:00] Hello, welcome to the Treat Your Business podcast. My name is Katie Bell. I'm super excited to bring you this week's episode, which if you employ team within your clinic or you are thinking about moving to an employed model, you are gonna wanna listen to the rest of this episode. I am going to try an attempt to break down the changes that we are seeing in terms of the minimum wage increase and the changes to our employers.

Allowance national [00:00:30] insurance contributions and what that actually means for you as a clinic owner. What you need to be thinking about, how you need to be interpreting those changes to ensure that your business remains profitable. So stay around, grab a cup of tea, tune in, get your calculators out. Tune in for this week episode.

Welcome to the Treat Your Business Podcast with Katie Bell. I'm Katie, and this is the place where clinic owners like you learn the strategies, [00:01:00] tools, and mindset shifts needed to transform your clinic into a thriving business. One that gives you more time, more money, and more freedom. Born from a passion to challenge the idea that average is normal.

We empower clinic owners to create extraordinary businesses, incomes, and lives through our world class coaching programs. We help you step out of overwhelm and into confidence, turning your clinic into a business that fuels your lifestyle, not drain it, it. So are you ready? [00:01:30] Let's dive in. I'm delighted to tell you this episode of The Treat Your Business podcast is proudly brought to you by New, the leading practice management software designed to streamline operations and empower every Allied Health clinic.

Their platform seamlessly handles every aspect of your clinic. From scheduling and clinical note taking to invoicing and reporting, their innovative solution will help streamline your clinic and free up your valuable time, allowing you to focus on delivering better patient care and [00:02:00] growing your business.

So if you are tired of juggling multiple systems and wasting precious hours on administrative tasks, then experience the innovation of CLE and discover how it can improve the efficiency and profitability of your practice. Visit cle.com today to learn more about how their automated features and user friendly interface can revolutionise the way you manage your practice.

Unlock the full potential of your clinic with new the [00:02:30] practice management software that puts you in control of your time. Now, let's get back to business.

Okay, so April 2025. A few days ago if you were listening to this as it as it goes out live, then we saw some changes to national minimum wage increasing by 6.7% for over 21's, and a change to our employers [00:03:00] national insurance contributions and various layers around that. I always think it's really a, the government really like to confuse us.

B, they seem to be wanting to make it harder and harder for business owners to one, survive and two, actually make any money. My job is to calm it all down for you, explain it in a really simple way, but that also means. And shows you the Like the things you can do about it, the things that you can prepare for, how [00:03:30] you can adapt your clinic to I guess ride the wave of all of these changes that we are seeing.

So let me break this down. Start with national insurance. Okay. Basically the amount of employers, so us as the boss employers, national insurance contributions. Have risen. Okay, so we were paying 13.8%. It's gone up to 15%. It's a 1.2% increase [00:04:00] in national insurance contributions. What they've also done is last year and years before they said, I tell you what, the first 9,100 pounds of national insurance contributions that you have to pay as an employer, you don't have to pay.

This year, they've decided that they're gonna reduce that. So they're only gonna give us 5,000 pounds worth of of kind of leeway where we don't have to start contributing, [00:04:30] right? 

Per employee.

So what also then happens 

is the employees, the people that work for you. Are getting a benefit. They were paying 10% national insurance. They're now gonna pay 8%. So they will ultimately see a little bit more in their net pay packet every month. Okay? So they have a win that is on anything earned between 12,570, which is our personal tax allowance, and [00:05:00] up to 50,270, right?

So they're paying 2% less. So what this means is that it's gonna ultimately cost us more as a clinic owner to have staff work for us. But what they've also done the government, is that they've given us an allowance. So there's two ways of looking at this. We start paying national insurance sooner on each individual.

But they've given [00:05:30] us more of an allowance to use. So as a company, you get now £10,500 pounds allowance. Like they're gifting you basically 10 and a half grand. It was £5,000. So what that means is that your total national insurance bill in the year can be reduced by ,£10500

let's say that you are a [00:06:00] clinic owner listening to this and you are like maybe about to employ one person or maybe even two people, and let's say one, okay, and they're gonna cost you 35,000 pounds if they were working for you full time. Right now, your employer, national insurance cost is zero.

National insurance contribution is being covered by the employer's allowance because the employer's allowance is 10,500. [00:06:30] Their contribution at a 35,000 pound wage would be 4,500 pounds. Now we work that out in a certain way. I'm gonna explain this to you the best I possibly can. Let's say you've got four members of staff, right?

You work out. Their total gross salary, we minus their the threshold that we start paying. So we minus 5,000 'cause we don't pay national insurance [00:07:00] until they hit 5,000. So we take that off each one and then we times it by 0.15 'cause that gives us 15%. So 35,000, take 5,000 pounds. So 30,000 pound now times 0.15.

4500 pounds. Now, if you were only employing one member of staff, that still sits in your 10 and half employees allowance, so you don't pay national insurance on those. If you had two members of staff on 35,000, you would still pay no national insurance 'cause you've not hit your 10 [00:07:30] and half thousand allowance.

So it starts to build a bigger picture for you in terms of. When your national insurance contributions kick in, how much you're gonna be paying, and therefore you can work out what the total cost of that employed person is in your company. Okay? Let's say you've got four members of staff that were working for you.

You would get a total of their gross salary. Okay? Let's say they're on [00:08:00] 35,000, 43,000, 27, and 50 grand. Total all that up. So you've got a total gross salary you would take off 

your employer's allowance, 10 and half thousand, and then times that by 0.15

that gives you your total employer's national insurance contributions for the year. And then you could divide that by 12 and that gives you monthly. So that starts to allow you to really work out [00:08:30] what each one is costing you. You've obviously got pension contributions to pay in addition to that. So 35,000 pounds is not what it's actually gonna cost you.

Depending on how many members of staff you've got, and when your employee's allowance then runs out and you start paying national insurance contributions. So it's not to be feared. Okay? There is some win for us. There's a little bit of win here that there's 2% national insurance reduction to [00:09:00] employee's.

So therefore, let's look at this from all your clients who are possibly employed. We'll be paying less national insurance. They will have a little bit more in their wage packet. How old school do I sound? And in their giro. That's an old saying, isn't it? And therefore possibly have a little bit more money to expend on a monthly basis.

Employers we're paying more national insurance. [00:09:30] We're paying it sooner, but they're giving us a bigger allowance. So then there is a negligible difference in what that is actually gonna look like. So we don't need to be like panicky. You need to do the maths. If you are one of our Thrive members, there is a employee national insurance calculator in the member area for you.

So you can start, it's going to do all the maths for you, and it start really factoring in. What is knowing the true cost of that employee in terms of the [00:10:00] whole picture of your business, depending on how many people you employ. So we wanna then think about when we know the total cost of the employee to us, what's the return on investment that we are getting?

We can then set our capacity rates, we can set our performance metrics based on what it is they really need to be doing. In your business to cover their employee cost, because that doesn't even factor in [00:10:30] the room cost, the marketing cost, the equipment cost, the insurance cost. All of those additional administrative costs have to be taken into consideration as well.

So when we are looking at therapy staff and those who are driving revenue from seeing patients, we are looking at. A three times return. So if somebody was costing me, let's say 35,000 as a basic as their salary they're not costing me that because I've [00:11:00] gotta add national insurance and my pension contributions in.

Let me just make that up to say they're gonna cost me 40 to year its probably less than that.. Then I, I need them to be making in the clinic, generating about £120,000 worth of revenue. Okay. And we can start to then see if the pricing that you have in your company, in your clinic is actually gonna produce that. Or are you giving them too much admin time, too much downtime, too many meeting times so [00:11:30] that the ability for them to drive revenue in your clinic is being reduced and the margin there is becoming smaller and smaller and smaller this also I guess leads us into the argument of, shall I employ somebody or shall I put them on a freelance contract? Now I am just in the throes of organising a. Employment check HR like rules and laws that are changing for employers. What we need to know. And we are gonna host that for you guys that you can come and attend.

So if you are thinking about [00:12:00] recruiting or you have team, you're gonna wanna be at this webinar because the guy running it is he knows a lot and there is also some rules around freelance and the way that we treat them. And some stuff's changing there as well. So we need to be really careful about whether actually we need to be employing somebody, or we could still use them as a freelance practitioner, but if they're taking 50 to 60% of of 40 to 60% really of the, [00:12:30] your session cost, you're just not gonna be making enough money.

Ultimately, your business won't be profitable. And if you start increasing your prices when people are on a percentage, then if you put your prices up by a quid and somebody's on 50%, you just give away 50 P straight away. So is it even worth doing a price increase when all you get is 50 P extra? Probably not.

When everything else in your business has increased, particularly over the last few months. We're seeing a huge price increase across all [00:13:00] our amenities and our services. We really have to know the true cost. It's so important and that may allows us to make good employment decisions. I think I've covered everything in employers employers, national insurance contributions rise and how that's gonna impact us as clinic owners.

Guys, don't stress about it. We run a massive clinic. It's making a bit of difference, but it's not making a whole lot of difference. We've gotta put a price rise in place [00:13:30] to negate that. We've gotta work on our retention, we've gotta work on all those things. As long as you know your numbers, you know what decisions you should be making.

So the second thing that we're seeing happen on the 1st of April was the 6.7% increase in national minimum wage 21 and over it has gone up as well for the other categories, but, i'm gonna focus on, most of you mainly have 21 year olds and over in your clinic. So what this ultimately means for us is [00:14:00] that we have higher wage bills to give anybody in your business, a 6.7% pay rise is wild. Absolutely wild. That's a lot of money. It would normally be like one to two or one to 3% that you might see an inflation rate increase.

But 6.7% on the back of what was a massive one last year is going to create huge problems, not just in our industry, but across all [00:14:30] industries that have a large portion of workers that might sit in this category.. So what this actually means, if you employed somebody full-time on the national minimum wage, it's gonna cost you £1500 more a year to employ them on their wage.

Obviously, you then have national insurance contributions as well, so you have got to, if you have got people, maybe client care administrators or people or cleaners or whoever is sat at in this wage bracket, [00:15:00] you have to budget. You have got to see what impact this is gonna have on your clinic moving forwards.

You've gotta make sure everybody's compliant. So you should have done this by the 1st of April already. It needs to be happening now. You need to do a, an amendment to that contract, and you need to be aware that this is gonna create possibly a squeeze on senior staff. What we're seeing is that there is a reduced gap then between the where they like your lower salaries were [00:15:30] and the next level, and then the next level up.

So it's really important that you don't just react, but that you review regularly your wages. We have, ours are always in September with our annual reviews. We don't really do it. Any other time of the year unless we've got this situation right now where we've got to increase the minimum wage, but that doesn't mean that everybody else's is gonna get to change this month because that's not great business.

So review your wages regularly, that's really [00:16:00] important. Create clear progression paths, ways for your team like. As you're gonna have to offer inflationary pay increases, but also as you go up in salaries, there needs to be a change of role, a change of responsibilities that warrants paying that additional amount.

And you still have to look at that return on investment in your clinic. What does your clinic actually need them doing at that level? And this is where a tiered pricing structure can come in really [00:16:30] well because.

As they become more senior staff, they warrant a bigger salary, and therefore you may have to charge more for them. And then think about non-monetary benefits as well. So think about flexible working. Think about CPD allowance. Think about maybe a bonus scheme on performance or a share based on performance.

There is other ways that you can make people's roles more appealing than just giving away more money all the time. But you've gotta, [00:17:00] you've gotta measure which is the best option. If you are gonna give away more than 1500 pound a year on a full-time member of staff for CPD, then you may as well just pay them the increasing wage, because that's what it's costing you ultimately.

So just, always measure the two against each other rather than just make a quick decision. And as your clinic grows, we need a balance between junior and senior staff because of the wage difference and the return on investment [00:17:30] and the differences of roles and responsilbity's within your clinic, there are certain times and it's really difficult.

I know when you are a younger business or a smaller business, you haven't got time for junior like I get it. It's a massive time investment effort, energy and the churn rate is a lot higher and therefore, actually what you need is somebody that can generate clinical revenue at a high level and just get on with the job and builds you then might build in junior level because you've [00:18:00] got more team that can support them. You've got a more robust plan rather than all just landing on you, on your shoulders.

Think about, remember that you've got this 10 and half thousand pound employers allowance. So it doesn't automatically mean if you bring in somebody as your first recruit on a slightly higher wage, that it's gonna cost you a fortune. Yeah, okay. You've got the wage to pay, but you should be seeing what they need to be seeing from a number of patients to break even.

And then those become your [00:18:30] performance metrics. Some of the employment laws that we are hearing are gonna change is very much about the employers really not having, any rights whatsoever. Shock horror, but the employees having loads more rights and that one of the things is being talked about is that they're gonna get full employment rights from day one of working with us.

Great. In my opinion, great, because now employers have got to performance manage from day one. There's no fucking about anymore. There's [00:19:00] no hiring average staff and allowing average people to be average at their job. This is going to create a culture that if you are not performance measured and managed from day one.

Like you are gonna be tied into a company and they're gonna rinse you for everything and you're gonna run a shit business. If you can performance manage from day one, you can get great hire really well. You put them on a clear performance plan metrics and you measure their work. We're gonna demand a better level and a better standard of [00:19:30] work from our people out there.

Than what was before where they don't have full employments. For two years. So we just let 'em start, let 'em see how they get on. Everything takes too long. And we don't really measure their performance that, and we just allow an average standard of work. So I think this is a great thing.

If this comes in, it also means that. You can start doing this stuff now, you can start getting into the habit now of measuring how well people are doing [00:20:00] and giving them key metrics that they must be focused on and working on and working towards, and having clear goals that they are expected to achieve as part of their role.

So those are the kind of immediate changes that we're seeing this April. Hopefully it's giving you a bit of information in a. And if it still puts the fear of God into you, then you need to look at the bigger picture of the benefits of employing somebody [00:20:30] and the buyin that they. The more control you generally have as an employer, you are more protected.

It's a more resilient business model. And ultimately where your business is going to require you to employ people rather than just have a whole bunch of freelance people that could leave tomorrow with no notice and take most of the clients with them. Because ultimately your agreements aren't gonna really stand up in a, in court.

And you've gotta think about protecting you as the business owner. And what your business needs moving forward. So [00:21:00] keep your eye on the bigger picture. Don't stress, get clear on your numbers. If you are a member, thrive member listening to this, head to members area to look at your employer employer's National Insurance calculator, and don't be put off.

Just take control. Do the research, get clear on your data, get clear on your numbers, and then make an informed decision from there. You can This I hope you've enjoyed this week's episode, everybody more me over the coming months, lots of solo episodes [00:21:30] coming up, but also lots of very fabulous guests.

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Katie Bell

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