How the Autumn Budget 2024 Impacts Employers

Today, the Chancellor of the Exchequer delivered the new Government’s long-awaited Autumn Budget, highlighting how the Autumn Budget 2024 impacts employers through key changes in public finances related to employment. With the recent Employment Rights Bill already setting the stage for new employment law changes, this Budget focused on public spending policies that will directly affect businesses. Here’s what businesses need to know:

1. National Minimum and Living Wage Increases
   The Government has accepted the Low Pay Commission’s recommendations, meaning a 6.7% increase in the National Living Wage for those aged 21 and over to £12.21 per hour, equating to an additional £1,400 annually for full-time workers. Notably, 18-20-year-olds will see a substantial 16.3% rise to £10 per hour. This shift supports the longer-term goal of removing age banding, creating a unified minimum wage across all ages. These new minimum pay rates will take effect from 1 April 2025.
2. Employer National Insurance Rise
   While income tax and National Insurance rates will not be increased for employees, employers’ National Insurance will increase by 1.2% to 15% effective April 2025. Additionally, the threshold at which employers will start to pay national insurance on a workers’ earnings will be lowered from £9,100 to £5,000.
3. End of Income Tax Threshold Freeze
   The freeze on income tax thresholds will conclude in 2028, with future updates expected to align with inflation, marking a return to progressive adjustments.
   
4. Increased Employment Allowance for Small Businesses
   To offset the impact of rising NI costs, the Employment Allowance will double from £5,000 to £10,000, and is expected to relieve nearly 865,000 small businesses of National Insurance costs next year.
5. Upcoming “Get Britain Working” White Paper
   Later this Autumn, the Government will publish the “Get Britain Working” white paper, designed to get those who are unemployed back into work. The Chancellor spoke about this paper in advance of the Budget, which you can see the announcement here.
6. Carer’s Allowance Earnings Threshold Increase
   The carer’s leave allowance earnings limit will rise, meaning more people will qualify for financial support.
7. Fuel Duty Freeze
   Employees will also see fuel costs remain the same, as the Government has announced a freeze on fuel duty for the coming year.
8. Enhanced Employee Protections and Leave Benefits
   The Budget reiterated commitments to enhancing protections against unfair dismissal, workplace bullying, and improving access to parental leave. Read our latest article on upcoming employment law changes for more insights.
9. Business Rate Relief for Retail and Hospitality
   Retail and hospitality businesses will benefit from a 40% relief on business rates, capped at £25,000, offering significant financial support to these sectors.

We’re here to help

We’ll be analysing today’s announcement in the coming days to provide further commentary and updates on how the Autumn Budget 2024 impacts employers and the progression of the Employment Rights Bill.

In the meantime, if we can help your business start preparing for these changes or if you have any questions about the upcoming updates, please get in contact.