The 2024 Budget, revealed by Chancellor Rachel Reeves on the 30th of October, introduces several key measures that are expected to impact UK employers, addressing business taxes, minimum wage adjustments, and incentives for workforce management.

However, at MAD-HR, we appreciate that there is a lot of information to sift through and several changes that will need planning for. It can be quite overwhelming!

Therefore, we have put together this blog to simplify what the relevant proposals in the Budget are for employers, and the impacts for what it could mean for managing your operations, costs, and HR strategies.

National Insurance (NI) and Employment Allowance Changes

Employer NI Contributions

  • From April 2025, employers will pay NI on employee earnings above £5,000*, a reduction from the current threshold of £9,100.
  • Additionally, the NI rate will increase from 13.8% to 15%* by April 2025.

IMPACT: This will affect your employment costs – so it would be important to factor these changes in future budgets / forecasts.

Employment Allowance Boost

  • To counterbalance the increased NI liability, the Employment Allowance (which allows companies to reduce their NI contributions) will rise from £5,000 to £10,500*.

IMPACT: This could offer relief, especially for SMEs looking to offset rising employment costs​.  Talk to your accountant to see the specific impact on your business of these two changes.

Changes in Business Taxes

Capital Gains Tax (CGT)

  • The capital gains tax on profits from selling shares is increasing from a top rate of 20% to 24%*.

IMPACT: This affects businesses considering the sale of shares or property. This could also impact investment planning and cash flow​.

Private Equity Profits Tax

  • Taxes on profits from private equity deals will rise to 32%, up from the previous 28%, effective in April 2025*.

IMPACT: For companies in the finance sector, this could mean higher tax liabilities on successful investments​.

Minimum Wage Increases

Living and Minimum Wage Adjustments

  • Starting in April 2025, the National Living Wage for over 21s will increase from £11.44 to £12.21 per hour, while rates for 18- to 20-year-olds will rise from £8.60 to £10* per hour.

IMPACT: This rise is part of a broader strategy to introduce a “single adult rate,” which could affect payroll costs and hiring budgets for roles that typically operate at minimum wage levels​.

Transport and Fuel Duty

Bus Fare Cap

  • The single bus fare cap in England will increase to £3 in January 2025, up from £2, aiming to support public transport access*.

IMPACT: For employers encouraging sustainable travel, this measure could incentivise employees to use public transport. The slight increase may require adjustments to travel allowances.

Fuel Duty

  • The 5p cut in fuel duty on petrol and diesel, initially set to end in April 2025, will remain for another year*.

IMPACT: This provides cost stability for employers relying on transportation. However, inflationary pressures on other costs still means that fuel budgets need careful management​.

Housing and Real Estate Taxes

Stamp Duty Surcharge for Second Homes

  • The surcharge on second home purchases in England and Northern Ireland is set to rise from 3% to 5%*.

 IMPACT: For employers investing in property or providing housing support for employees, this may influence property acquisition costs​.

Increased Affordable Housing Budget

  • The affordable homes budget has been increased by £500 million through to 2026*.

IMPACT: Employers in sectors where housing affordability affects recruitment may find that the expansion could help to retain talent in regions with higher living costs​.

Government Spending Commitments in Health and Education

NHS and Education Funding

  • Additional funding of £22.6 billion for the NHS and £6.7 billion for education investment underscores a focus on public services*.

IMPACT: Employers in the healthcare sector could see an increased demand for talent.

Summary

The 2024 Budget prioritises significant changes to National Insurance, minimum wages, and business taxes that could collectively increase operating costs for employers.

However, support measures such as the expanded Employment Allowance, affordable housing investments, and stable fuel duty will provide some relief, especially to SMEs.

Employers should already be considering beginning to plan for these changes.

If you would like support revisiting budgets, assessing talent needs, and exploring cost-efficient workforce management strategies, MAD-HR can help you to navigate these adjustments successfully.

Let’s take some of the weight from your shoulders and start 2025 with confidence and a clear management strategy for a successful year ahead. Contact us today to get started!

 

*Information was gathered from the sources of: CIPD, BBC and PMInsight and was correct at time of writing.