Overview of Autumn Budget

Chancellor Rachel Reeves delivered the first Autumn budget under the new Labour Government on 30 October.

Here is a summary of the payroll related content.

National Living and Minimum Wage

NLW

From April 2025 the National Living Wage will increase to ￡12.21 per hour for all eligible employees aged 21 and over.

?NMW

?Increases will be applied as follows:

18-20 year olds will increase to ￡10.00 per hour for all eligible workers.

Under 18s and Apprentices will increase to ￡7.55 per hour,

The Accommodation Offset rate will increase to ￡10.66 a day.

National Insurance

Effective from 6 April 2025, Employers NICs will increase by 1.2% to 15%, the Secondary threshold will be lowered from ￡9,100 to ￡5,000 per annum, this will remain in place until April 2028, thereafter, increases will be applied in line with Consumer Price Index (CPI).

Lower Earnings Limit

From April 2025, the LEL threshold for employees will increase to the weekly amount of ￡125 and an annual amount of ￡6,500.

(Be careful as the amount is different for the self-employed – Small Profits Threshold will increase to ￡6,845 Per annum).

Employment Allowance

The annual allowance will increase from ￡5,000 to ￡10,500, whilst at the same time government will remove the ￡100,000 cap on the employers NIC pay bill, effective from April 2025.

Employers NIC Reliefs

Veterans Employer NIC exemption

Government announced the relief will be extended for another year from the 2025/26 tax year. Therefore, employers will pay no employer NICs provided the veteran’s earnings do not exceed the Upper Secondary Threshold, this continues to remain at the annual amount of ￡50,270 and applies when employers employ a Veteran in a civilian role in the first year after leaving the forces.

Freeports and Investment Zones

Confirmation of continued funding for these initiatives has been announced, employers will continue to benefit from the NIC exemptions in accordance with existing rules when engaging workers in the current regional ports and zones.

Approval of the expansion of the Investment Zones in East Midland, has been given the ‘go ahead’, and will support manufacturing and ‘’green’’ industries. In addition, proposals for five new customs sites will be designated in existing Freeports shortly.

Funds will be allocated to support trade and Investment under the ‘Scotland Brand’ initiative.

Company Cars

The company car Appropriate Percentage (AP) benefit rate for Electric Vehicles (zero emissions) will remain at 2% up to 2027/28 and will rise by 2% for tax years 2028-29 and 2029-30. From 2029/30 the AP will rise to 9%.

Cars with emissions of 1 – 50 g of CO2 per kilometer, including hybrid vehicles, will rise to 18% in 2028-29 and 19% in 2029-30.

Phased increases will also apply to all other vehicle bands which will increase by 1 percentage point per year in 2028-29 and 2029-30. The maximum AP will also increase by 1 percentage point from 37% per year to 38% for 2028-2029 and 39% for 2029-2030.

Car and Van Benefit Charge and Fuel Benefit Charges

These will be uprated by CPI from 6 April 2025.

Other matters

Clarification of the taxable status of Statutory Neonatal Care Pay?

Legislation will be laid to ensure the tax treatment of Statutory Neonatal Care and Pay (SNCP), which will be introduced in April 2025, is aligned with the same treatment for other forms of family leave and pay (SMP/ SPP).? In addition, the legislation will also clarify the position regarding deductions from this type of payment.

Double Pick-Up cabs - Clarification on the rules for taxation of Double cab pick-up vehicles (DCPUs) are announced. This follows an earlier Court of Appeal judgement; the government will treat DCPUs with a payload of one tonne or more as cars for certain tax purposes. This will come into force from 6 April 2025. Transitional measures will apply for purchases made prior to 6 April 2025.

Contrived Car Ownership Schemes - Legislation will be introduced to remove the loophole in car ownership schemes which has allowed employees to potentially bypass company car benefit charges, this is due to take effect from April 2026.

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