What the 2024 Autumn Budget Means for Employers

On the 30th October 2024, the Labour Government issued its first budget since coming into power. And as expected, there are plenty of changes that employers should be across; in this blog we set out the key points that will impact businesses. 

Any changes in legislation are confusing and often complicated, which can result in anxiety for HR professionals and small business owners. In an attempt to demystify the budget, and ease some of your worries, we have broken it down. 

Some significant changes that we will delve into include the increases to National Minimum Wage, and National Insurance. Although these changes sound scary, the blow will be softened for some employers, by an increase in the employment allowance available to small businesses. 

Keep reading for a concise run-through of the 2024 Autumn Budget. 

National Minimum Wage and National Insurance contributions to increase

In tandem with the budget provisions, the Government announced the annual National Minimum Wage increases. This will take effect from 1 April 2025, so you still have time to get prepared. The new Minimum Wage requirements are:

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

The increases bring the rates for those under 21 and over 21 closer together and is a step towards the Government’s plans to have a single rate for all adult workers.

The accommodation offset (the amount for accommodation provided by an employer that can be taken into account when calculating the minimum wage) will also rise to from £9.99 to £10.66 per day.

The Government has also announced that there will be a 1.2% increase to National Insurance paid by employers. This means it will go from 13.8% to 15% on 1 April 2025. 

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

Employment allowance to increase

In order to soften the blow on increased 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 National Insurance contributions by the amount of the allowance, over the financial year.

The Chancellor explained that this will mean 865,000 employers will not pay any National Insurance at all next year (because the allowance of £10,500 applied against their National Insurance obligations will reduce their contributions to zero), while over one million will pay the same or less than they did previously.

Freeze on personal tax thresholds to end

The Government announced that there will be no extension of the current freeze on income tax and National Insurance thresholds, and the relevant thresholds will increase in line with inflation from the 2028-9 financial year onwards.

Pensions

Pensions will also be affected by the Autumn Budget. Basic and new state pensions will be uprated by 4.1% in the 2025-26 financial year, in line with earnings growth. 

Uplift to carers’ allowance

The Chancellor also announced that there will be an increase in the amount carers can earn while receiving the £81.90 per week carer’s allowance from the Government.

The increase will mean a carer can work an equivalent of 16 hours at the National Living Wage per week, and so will be able to earn over £10,000 a year while still eligible to receive the benefit. Good news for employees with caring responsibilities, but also for employers by providing increased incentives for carer’s to remain in employment.

Want to keep updated with legal requirements? 

Keeping abreast of all the legal requirements for your business is hard work! Not only is it complicated, but it’s also time consuming. Employment Hero’s goal is to make the lives of HR professionals and small business owners easier, which is where our HR Advisory service comes into play. 

Our HR Advisory service offers unlimited access to HR legal experts to guide you through the updates in legislation. Spend less time worrying about legislation, and more time focusing on what really matters – your people.