What the 2024 Autumn Budget Means for UK Businesses

The Autumn budget has just been announced, so here's a quick breakdown of what it means for you and your business.

With the budget only live for an hour, we’re giving you the fast facts and key takeaways on what’s in store for UK businesses. Whether you’re thinking about hiring, budgeting, or planning staff changes, here’s what you need to know.

?? Higher Employer National Insurance Contributions

Starting April 2025, employers will see National Insurance contributions rise from 13.8% to 15%. This increase is expected to bring in ￡25bn per year but also puts added pressure on payroll costs for businesses.

• Impact on Hiring & Pay: For companies, this could mean reconsidering hiring plans, potential hiring freezes, or finding other ways to manage staffing budgets. Some may need to pause or limit pay raises to balance out the increased tax burden.
• Tough Choices Ahead: Business owners and HR teams might face tough conversations around redundancies or workforce restructuring, especially for companies already under financial strain. Managing these transitions will require careful planning to keep employee morale steady.

?? Lower NI Threshold

The threshold at which businesses start paying National Insurance will fall from ￡9,100 to ￡5,000, bringing even smaller companies into the NI bracket sooner.

• Challenge for Small Businesses: The Chancellor has promised some protections for small businesses, though details are still emerging. For many, this threshold change means higher payroll costs right from the start, which could affect growth and hiring plans.

?? Sector-Specific Support

If you’re in retail, hospitality, or leisure, there’s some targeted relief in the form of two lower business tax rates and a 40% reduction on business rates for 2025-26, capped at ￡110,000.

• Tax Relief: This is welcome news for sectors hit hard by recent economic challenges, but with the cap in place, larger companies may still feel the squeeze. For smaller players, this relief could offer a bit of breathing room amidst rising costs.

??? Minimum Wage Increases

Alongside tax changes, the budget raises the national living wage to ￡12.21 per hour for those 21 and over, a 6.7% increase. This will drive up wage bills, particularly for businesses with larger teams in lower-wage roles.

• Labour Cost Pressures: While it’s good news for employees, this increase means higher outgoings for employers already managing rising National Insurance costs. For sectors like retail and hospitality, these added costs may need to be absorbed by reducing other expenses, potentially impacting recruitment and training budgets.

?? Planning Ahead

This budget has a clear message: companies will need to tighten their belts. Rising costs mean HR and business leaders will need to think strategically about workforce planning, potentially restructuring or freezing hiring to adapt.

• Benefits & Pay Reviews: With these cost pressures, some companies may have to re-evaluate their benefits packages, salary increments, or alternative forms of employee engagement. These measures could help manage costs while still supporting retention.
• Staying Competitive in a Tight Labour Market: In an environment where every budget line counts, it’s crucial to keep an eye on employer branding and talent retention. Even small changes to benefits or flexibility can go a long way in supporting morale when pay increases aren’t feasible.

What Are Your Thoughts?

Now’s the time to proactively assess your budgets, hiring plans, and employee engagement strategies to navigate these changes effectively.

What’s your first reaction to the budget announcement? Are you planning any immediate changes? Let’s discuss in the comments.

#UKBudget #HR #BusinessStrategy #NationalInsurance