2024 Autumn Budget – Payroll Changes from April 2025

Tax and National Insurance (NI)

• Employer’s NI will rise by 1.2%, reaching 15% from 6 April 2025.
• Employer’s NI secondary threshold the level at which business start paying National Insurance on each employee’s salary will drop from ￡9,100 a year to ￡5,000, which means employers may have more NIC costs.
• Employment allowance will be increased from ￡5,000 to ￡10,500 and be extended to all eligible employers due to the removal of the ￡100,000 cap, allowing more employers to benefit from this allowance.
• Income tax and NI threshold freeze won’t be extended beyond 2028/29.

National Living Wage (NLW) and National Minimum Wage Increases

• From April 2025, the NLW will rise by 6.7%, taking the hourly rate from ￡11.44 to ￡12.21 for workers over 21.
• The National Minimum Wage will also rise for younger workers, with 18 to 20-year-olds seeing a record 16.3% increase from ￡8.60 to ￡10.00 per hour.

Rates of Vehicle Tax

• Company car tax rates will be set for 2028/29 and 2029/30 to allow business to plan long term.
• Zero emission and electric vehicles will increase by two percentage points in each year rising to 9% in 2029/30.
• Cars with emissions between one and 50g of CO2 per kilometre will rise to 18% in 2028/29 and 19% in 2029/30.
• All other bands will rise by one percentage point in both 20218/29 and 2029/30.

Company cars tax rates being available this far in advance is good news for companies looking to plan their fleet strategies and budgets. The tax rates for cars with emissions between one and 50g of CO2 per Km may see substantial increase in 2028/29.

Benefits in Kind

• Confirmed plans to mandate payrolling benefits in kind via payroll software from April 2026.
• Employment related loans and accommodation will remain processed via P11D and P11D(b) forms as these can be difficult to value accurately within the tax year.

HMRC stated that they intend to make changes in the future to mandate the payrolling of these benefits, but for the time being employers will have the option to continue with the P11d and P11d(b) forms process if they require.

Other

• Reform of Overseas Workday Relief (OWR) was also announced with the relief being extended to a four-year period to align with the new FIG regime. Claims for OWR will be subject to an annual limit of the lower of ￡300,000 or 30% of the employee’s net employment income and requirements for the relevant income to be kept offshore will be removed.

The Employment Rights Bill was published on 10 October 2024. This introduced 28 significant reforms to a range of measures. These changes are set to reshape the landscape of employment law. The majority of reforms are anticipated to take effect from 2026, with most consultations expected to begin in 2025 and our Legal team can provide more details of these if required.

Additional Information

If you would like any further information on the changes and how they might affect you or your business, please do not hesitate to contact your usual Dixcart UK contact or enquire at?[email protected].

The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.