Autumn 2024 Budget speech: History in the making?
On 30 October 2024, Rachel Reeves delivered her first Budget speech. As the first Budget speech ever delivered by a female Chancellor of the Exchequer, the occasion was bound to be one for the history books regardless of what was said.
The Chancellor’s speech lasted 76 minutes and right from the start she claimed that difficult decisions were having to be made because of the £22bn ‘black hole’ left in the public finances by the previous government.
Once the speech had concluded there was a feeling that the Budget may not have been as bad as we might have expected. This is likely the effect the Chancellor was hoping for and may have had something to do with the fact that the main way of increasing taxes – from a rise in Employers National Insurance (NI) – had already been strongly indicated before the Budget took place.
For working people, the Budget maintained the status quo with no increases to income tax, national insurance or VAT. The personal allowances and tax rate bands were frozen by the previous government as a way of raising taxes known as ‘fiscal drag’. This is because as pay increases, more earnings are likely to be taxed at higher rates. The Chancellor did promise that from 2028/29, personal tax thresholds would be uprated in line with inflation once again.
However, businesses were one of the big losers in the Budget, largely through the aforementioned Employers NI increases as well as increases to the minimum wage rates, which are both explored in the two articles below.
Retail, hospitality and leisure (RHL) businesses received some support through continued business rates relief. For the 2025/26 tax year, RHL businesses will be given a 40% relief on their business rates, subject to a cap of £110,000 per business. The small business multiplier will also be frozen in 2025/26. These are interim measures as the government intends to introduce permanently lower tax rates for RHL properties with rateable values under £500,000 from 2026/27.
The Chancellor also announced investments in public services and home building. These may mean contracts and work for businesses across various sectors.
If you are concerned about how any of the Budget measures will affect you and your business, please get in touch at any time and we will be happy to provide you with personalised advice.
Businesses count the cost of increases to Employers National Insurance
As has been widely expected in the last few weeks, the Chancellor, Rachel Reeves, made some significant changes to the Employers National Insurance (NI) rate and threshold in the Autumn Budget.
From 1 April 2025, the rate for Employers National Insurance (NI) will increase from 13.8% to 15%. At the same time, the level at which employers start paying national insurance on each employee’s salary will be reduced from £9,100 per year to £5,000. The combination of these two changes means a potentially significant increase in payroll costs for businesses.
To counteract this, the employment allowance will be increased from its current £5,000 to £10,500. The Chancellor claimed that this would mean that “865,000 employers won’t pay any National Insurance at all next year and over 1 million will pay the same or less than they did previously.”
An employer who employs 4 full time (35 hours per week) employees at the National Living Wage rate will not have to pay NI on their wages.
However, there is some encouraging news for larger businesses. Previously the Employment Allowance could only be claimed by an employer if their Employers NI liability was less than £100,000 in the tax year. This restriction will be removed and mean that all employers that otherwise qualify will be able to reduce their national insurance liability by £10,500.
Businesses planning their headcount and budgeting payroll costs for next year will want to factor in the increased national insurance costs. If you need any help with doing this, please do not hesitate to give us a call.
See: https://www.bbc.co.uk/news/articles/c4g7x6p865zo
National Minimum Wage increases for April 2025 announced
The government has announced the new National Minimum Wage (NMW) rates that will apply from 1 April 2025. These are as follows:
| 1 April 2025 – 31 March 2026 | 1 April 2024 – 31 March 2025 | |
| National Living Wage (Age 21 and over) | £12.21 | £11.44 |
| 18-20 Year Old Rate | £10.00 | £8.60 |
| 16-17 Year Old Rate | £7.55 | £6.40 |
| Apprentice Rate | £7.55 | £6.40 |
The National Living Wage rate paid to those who are aged 21 and over has increased by 6.7%. This is a relatively modest increase in comparison to the last 2 years but is still expected to equal two-thirds of median earnings and in real terms be the highest minimum wage has been in its history in the UK.
Baronness Philippa Stroud, Chair of the Low Pay Commission (LPC), appeared to acknowledge the strain the increases in recent years have placed on businesses when she said: “The data shows some signs of employers finding it harder to adapt to minimum wage increases.” She also said that while the economy is expected to grow over the next year, “productivity growth remains subdued.”
After coming into power, Labour asked the Low Pay Commission, an independent body that recommends what rates are used each year, to work towards removing the age bands so that all adults receive the same minimum wage. As a result, the increases to the 18-20 Year Old, 16-17 Year Old and Apprentice Rates are significant.
While these increases are good news for workers, employers will need to look at affordability when planning their headcount for next year.
See: https://www.gov.uk/government/news/national-living-wage-to-increase-to-1221-in-april-2025
Bus fare cap to increase to £3
Two days before the Budget, the Prime Minister announced that the cap for single bus fares would be increased to £3 from its current £2.
The current fare cap is due to expire at the end of 2024. Without intervention, prices for some routes looked set to rise significantly. The new £3 cap will run until the end of 2025.
The cap means that no single bus fare on routes that are included in the scheme can exceed £3. Routes where the fare is less than £3 can only increase in line with inflation.
For workers that are reliant on bus fares, the new cap means an increase in their costs but at least continues to provide some relief.
Employers now required to take “reasonable steps” to prevent sexual harassment
From 26 October 2024, employers were given a new legal duty to take “reasonable steps” to prevent sexual harassment of employees.
This duty requires employers to anticipate when sexual harassment may occur and take reasonable steps to prevent it. If sexual harassment has already taken place, then an employer would need to take action to stop it from happening again.
It is not possible for an individual to make a claim against their employer for failing to take preventative action. However, if they successfully bring a sexual harassment claim, the employment tribunal will automatically consider whether the employer failed in its duty to prevent the harassment from happening. If they find that the employer was negligent then they can order an uplift in the compensation paid to the employee.
ACAS have provided guidance to employers on what to do, including advising on things that should be included in a sexual harassment policy.
To review the guidance, see: https://www.acas.org.uk/sexual-harassment