The Autumn Budget: What Employers Need to Know

On 29 October, Rachel Reeves made history as the first woman to deliver a budget and as the first Labour Chancellor to do so in 14 years.

Key highlights from an employment perspective include the following:

National Insurance

• As anticipated ahead of the budget announcement, the National Insurance (NI) rate paid by employers will increase from 13.8% to 15% from 6 April 2025. In addition, the ‘secondary threshold’- the level at which businesses start paying NI on each employee’s salary will reduce from £9,100 to £5,000.
• In a measure to protect smaller businesses, it has been confirmed that employment allowance will increase from £5,000 to £10,500, meaning that there will be a decrease in the number of small businesses liable to pay employer’s NI.

• The measures will raise £25bn a year by the end of the forecast period, the biggest single tax-raising measure in the budget.

The minimum wage

Starting on 6 April 2025, the following increases to the National Minimum and National Living Wage will take effect:

• An 18% increase for those under 18 and apprentices, rising from £6.40 to £7.55.
• A 16.3% increase for 18-20 year olds, from £8.60 to £10.00.
• A 6.7% increase for over-21s, from £11.44 to £12.21.
• Additionally, a single adult rate will be gradually introduced to eventually standardise pay for those under-21s.

The rise in base wage rates, along with the anticipated increase in employer’s NI contributions outlined in the budget, has raised concerns about the impact on businesses facing higher wage bill demands.

Get Britain Working Again Plan

• The Get Britain Working initiative was introduced ahead of the official budget as part of the government’s strategy to increase workforce participation.
• This initiative seeks to unify national and local efforts to raise employment levels by coordinating services that support jobs, health, and skill development.
• To further enhance employment, the Chancellor has also pledged an additional £1.8 billion to expand government-funded childcare support for working parents. With a £115 million investment in Connect to Work, a program that helps individuals with disabilities or health conditions find job opportunities.

With sickness absence and mental health conditions being the leading causes of long-term work absences, the Connect to Work scheme could play a valuable role in providing support for individuals within the workplace and those aiming to return to work.

If we can help you and your business with any HR or employment-related matters, please do not hesitate to get in contact with us.

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