In its Autumn Budget for 2024, the UK government has introduced significant policy changes, aimed at addressing fiscal gaps while balancing support for businesses. Among the major updates, National Insurance (NI) contributions for employers are set to rise, marking a notable shift for UK businesses in managing employment costs.
National Insurance Adjustments – What Employers Need to Know:
From April 2025, employer contributions for NI will increase from 13.8% to 15%. Alongside this, the threshold at which employers are required to pay NI will be lowered from £9,100 to £5,000. While larger businesses may feel the impact more intensely, this change is likely to encourage workforce stability and investments in new roles, balancing the additional payroll cost with expected employment support measures.
Employment Allowance Uplift:
To mitigate this cost rise, the government has announced a higher Employment Allowance. For small businesses, this allowance will increase to £10,500 annually, meaning many businesses can offset the elevated National Insurance rates by benefiting from reduced National Insurance payments, freeing funds for reinvestment.
Strategic Considerations for Employers:
With payroll costs rising, many SMEs are expected to adapt their strategies, perhaps reassessing hiring plans or realigning budgets to cover increased contributions. Larger firms may see added financial pressure, leading to considerations around efficiency, cost-cutting, and exploring options to manage labour expenses.
Additional Updates from the Budget:
In addition to National Insurance adjustments, the Autumn Budget also focused on areas of relief for businesses:
– Sector-Specific Investment: Substantial funds are allocated for R&D, housing, and technology, supporting growth in key industries.
– Incentives for Green Initiatives: Continued support for electric vehicles includes incentives for businesses transitioning fleets to electric.
– Revised Tax Reliefs: An extension of relief schemes like SEIS and EIS offers continued support for startups and investors, encouraging sustainable economic growth.
We’re here to help you!
As the National Insurance changes approach, UK employers are encouraged to assess how these adjustments align with their long-term objectives. Nordens is here to provide strategic advice, helping businesses prepare for these shifts effectively.
As more information about the Budget announcements get released we will be sharing all of the details you need to know about how these changes impact your business. Stay tuned!
If you need more advice and information on how it affects your business specifically, book a free consultation today!
