What does the Autumn Budget mean for HR?

Yesterday, Rachel Reeves, the first female Chancellor delivered Labour’s first budget in 14 years. We have outlined the main areas of the Autumn Budget that employers and HR should be aware of.

National Living Wage

National Living Wage

• Before the budget, it was announced that the National Living Wage (NLW) would increase by 6.7%.
• This change will come in April and the hourly rate will increase by 77p to £12.21 (from £11.44).
• Over 3 million workers will receive this pay rise and for some, this increase would be worth £1,400 a year.

National Minimum Wage

• For 18 – 20 year olds, the National Minimum Wage (NMW) will increase to £10 from £8.60.
• This increase of £1.40 (16.3%) is the highest increase rate on record. For full-time workers, this would provide an increase of £2500 a year.  

Employers’ National Insurance

Increase in employers’ National Insurance

•  Employers’ National Insurance will increase by 1.2 percentage points from 13.8% to 15% by April 2025, helping to raise £25 billion.
• This increase was lower than expected (2 percentage points was predicted). Although, the threshold at which they will start paying National Insurance on worker’s earnings will drop significantly from £9,100 a year to £5,000.

Employment Allowance

• There will be help for small businesses – employment allowance will increase from £5,000 to £10,500.
• As a result, 865,000 employers will not pay any National Insurance next year and more than one million will either pay the same or less than they previously have.
• Businesses will be able to employ up to four full-time national living wage workers without needing to pay employers’ national insurance on their wages.

Raising £40 billion in taxes

Reeves shared a plan to raise £40 billion in taxes. This will help address a gap in public finances, fund public service investments and support compensation payments.

The main sources of this revenue will come from:

• Increase in Employers’ National Insurance
• Raising tax capital gains
• Increasing private school fees

No extension to the freeze on personal tax thresholds

There will be no extension to the freeze on income tax and national insurance thresholds. As a result, from 2028-9, thresholds will be uprated in line with inflation. This will enable workers to earn money before facing higher taxes.

Abolish the ‘outdated’ non-dom tax regime

• From April 2025, the scheme where employees only pay tax to the UK government for work carried out in the UK will be abolished.
• It will be replaced with a new ‘internationally competitive’ scheme for those coming to work in the UK temporarily.

Increases in carers’ allowance

• The amount that carers will be able to earn while receiving the £81.90 per week allowance will be increased to the equivalent of 16 hours at the NLW per week.
• Working carers will be able to earn £196 per week (over £10,000 a year) whilst claiming Carer’s allowance.
• This is an increase of about £45 per week compared to the previous threshold.
• With this increase, 60,000 more carers will be able to access this allowance.

Pensions

• Basic and new state pension will be increased by 4.1% in 2025-26
• This will be a £470 increase for over 12 million UK pensioners
• Inherited pensions will be included in inheritance tax for the first time from 2027.

Get Britain Working scheme

• The government will fund £240 million for 16 projects that have been created to target those ‘economically inactive’
• These projects will be rolled out in local areas, offering work, health and skill support for disabled and long-term sick people
• Their Get Britain Working White Paper will soon be published and explain new approaches to tackle the root cause of ill-health-related inactivity, support young people out of education, training or employment and help people develop in their careers.

Covid corruption commissioner

• There will be an appointment of a Covid corruption commissioner to work alongside the HMRC, the Serious Fraud Office and the National Crime Agency
• They will investigate covid-related fraud to uncover companies that used the pandemic to gain extra money
• It is estimated there is a total of £7.6 billion worth of fraud to be investigated

To find out more information or if you require any advice regarding the Autumn Budget please get in contact with our team of experts.

T: 0330 107 1037

E: contact@hpc.uk.com

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