On October 30, 2024, the Labor government released its first budget since coming to power. And as expected, employers are expected to adopt many changes; In this blog we outline the key points that will impact businesses.

Any changes in legislation are confusing and often complicated, which can cause anxiety among human resources professionals and small business owners. In an effort to demystify the budget and ease some of your concerns, we’ve broken it down.

Some important changes we will look at include increases to the National Minimum Wage and National Insurance. While these changes seem scary, the blow will be softened for some employers with an increase in the employment allowance available to small businesses.

Any changes in legislation are confusing and often complicated, which can cause anxiety among human resources professionals and small business owners. In an effort to demystify the budget and ease some of your concerns, we’ve broken it down.

Keep reading for a concise overview of the 2024 fall budget.

National minimum wage and national insurance contributions to increase

Alongside the budgetary provisions, the The government has announced annual increases in the national minimum wage. This will come into force on April 1, 2025, so you still have time to prepare. The new minimum wage requirements are:

• 21 years and over – the minimum wage will increase from £11.44 to £12.21 per hour
• 18 to 20 – the minimum wage will increase from £8.60 to £10 an hour
• 16 to 17 years old and apprentices – the minimum wage will increase from £6.40 to £7.55 per hour

These increases bring the rates for under-21s and over-21s closer together and are a step towards the government’s plans to introduce a single rate for all adult workers.

Housing compensation (the amount of accommodation provided by an employer that can be taken into account when calculating the minimum wage) will also increase from £9.99 to £10.66 per day.

The government also announced that there would be a 1.2% increase in national insurance paid by employers. This means that it will increase from 13.8% to 15% on April 1, 2025.

The threshold at which employers start paying National Insurance on a worker’s earnings will also rise from £9,100 to £5,000 a year.

Employment allowance will increase

To soften the blow from rising national insurance contributions, the government announced that the employment allowance for small businesses will be increased from £5,000 to £10,500. The allowance allows employers to reduce their Social Security contributions up to the amount of the allowance, over the financial year.

The Chancellor explained that this would mean 865,000 employers would pay no national insurance next year (because the £10,500 allowance applied to their national insurance obligations would reduce their contributions to zero), while more than one million would pay the same amount or less. than they did before.

End of freezing of personal tax thresholds

The government has announced that there will be no extension of the current freeze on income tax and national insurance thresholds, and that the relevant thresholds will increase in line with inflation from financial year 2028-2029.

Retirements

Pensions will also be affected by the autumn budget. Basic and new state pensions will be increased by 4.1% in the 2025-26 financial year, in line with income growth.

Increase in carers’ allowance

The Chancellor also announced there would be an increase in the amount carers can earn while receiving the Government’s £81.90-a-week Carer’s Allowance.

This increase will mean that a carer will be able to work the equivalent of 16 hours per week at the National Living Wage and will therefore be able to earn more than £10,000 per year and still be eligible for the benefit. This is good news for employees with family responsibilities, but also for employers, because it gives caregivers more incentive to keep their jobs.

Do you want to stay informed about legal requirements?

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