Changes are coming! From National Insurance increases to business rate discounts, the Autumn Budget 2024 covers a lot. We’ve outlined the biggest updates impacting businesses – read more in our new article.

Autumn Budget 2024 Insights: What’s New for Payroll, National Insurance, and Taxation?

The UK Autumn Budget 2024, presented by Chancellor Rachel Reeves under the Labour government, outlines significant changes across payroll, business, and taxation policies aimed at supporting economic growth, improving fairness in the tax system, and adjusting to current economic demands.

Below is a summary of the most relevant updates impacting employers, employees, and business owners. You can read the full budget announcement on the GOV.UK website.

 

  1. National Insurance Contributions (NICs)
  • From April 2025, the employer National Insurance rate will rise by 1.2%, bringing it to 15%.
  • The NIC threshold, currently set at £9,100, will be lowered to £5,000, which means employers will start paying NICs at a lower earnings level.
  • However, the Employment Allowance, which offsets NI costs for eligible employers, will increase from £5,000 to £10,500. This increase is expected to exempt 865,000 employers from paying NICs, with over a million businesses paying the same as the prior year.
  1. Personal Income Tax Thresholds
  • The freeze on personal income tax and National Insurance thresholds is scheduled to conclude in April 2028. Following that, personal tax thresholds will begin adjusting annually with inflation, aligning with the tax year 2028-29.
  1. National Minimum Wage Increase
  • Effective from April 2025, the National Living Wage for individuals aged 21 and older will rise by 6.7%, reaching £12.21 per hour.
  • The National Minimum Wage for 18-20-year-olds will increase significantly by 16%, taking the rate to £10 per hour.
  1. Business Rates Adjustments
  • The current 75% discount on business rates will expire in April 2025, replaced by a 40% discount capped at £110,000.
  • Additionally, a permanent lower rate for high-street retail, hospitality, and leisure sectors is expected to take effect from the 2026-27 tax year, aimed at reducing the tax burden on these sectors.
  1. Corporation Tax Rate Stability
  • The main Corporation Tax rate for businesses with taxable profits exceeding £250,000 will stay at 25% until the next general election, providing stability for corporate tax planning.
  1. Capital Gains Tax (CGT) Adjustments
  • As of 30 October 2024, general CGT rates will increase from 10% to 18% for basic rate taxpayers, and from 20% to 24% for higher rate taxpayers.
  • The rate for Business Asset Disposal Relief and Investors’ Relief will rise to 14% from April 2025 and further to 18% from April 2026, aligning with the standard rate.
  1. Windfall Tax for the Energy Sector
  • The Energy Profits Levy, specifically targeting oil and gas companies, will increase by 3%, raising the rate to 38%. This levy will remain effective until 31 March 2030.
  1. HMRC Compliance Enhancements
  • To encourage prompt payment, HMRC will raise interest rates on overdue tax liabilities.
  • There will also be an increase in HMRC’s enforcement activities, with a focus on hiring more compliance officers to strengthen criminal investigations and improve compliance.
  1. Making Tax Digital (MTD) Expansion
  • The government confirmed its commitment to the ongoing expansion of MTD, with implementation targeted at businesses earning over £20,000 per year.

 

The 2024 Autumn Budget introduces key updates that will impact various facets of business operations, particularly payroll management, tax planning, and compliance. To effectively navigate these changes, businesses may need to adjust their strategies and processes. These updates are likely to influence payroll costs due to shifts in National Insurance and wage requirements, while adjustments to capital gains and corporation tax may affect budgeting and cash flow planning.

For tailored guidance on adapting to these updates, optimising payroll structures, and ensuring compliance with the latest tax policies, please contact our team. We are here to provide comprehensive support, from payroll administration adjustments to detailed tax planning solutions.