Higher Taxes and Wages – What Will the Budget Cost Your Business?
NFRC is generally encouraged by the government’s increased commitment to the UK’s infrastructure and housing programmes although there are some up-front changes that could raise operating costs. Higher wages, especially for apprentices, should help address staff shortages as entry level jobs become more attractive.
This article will cover all the areas of the Autumn Budget that could impact your business.
Costs:
A large chunk of the government’s fundraising for the Budget, around £25 billion, has come from increasing National Insurance for employers from 13.8% to 15% and lowering the threshold at which this is paid from £9,100 to £5,000. This comes into effect in April 2025.
For businesses that employ large teams, this announcement could be costly, reaching up to £615 per employee annually
However, micro businesses who employ ten or less are somewhat insulated from this hike due to the employment allowance, which allows companies to keep their National Insurance liability, increasing from £5,000 to £10,500.
Further employment costs will come in the form of rises in wages for workers at all levels. The National Living Wage for people aged 21 or older will rise by 6.7% from £11.44 an hour to £12.21 from next April. This is accompanied by the National Minimum Wage rising for people aged between 18 and 20 years old from £8.60 to £10 and minimum rates for apprentices increasing from £6.40 to £7.55 an hour. While this will hurt in the short term, NFRC hopes that it will also make entry level trade jobs more appealing which will help towards solving the skills shortage crisis.
Costs will also rise for businesses' property rates. The 75% discount on rates will expire in April 2025, but this will be replaced by a 40% discount for 2025-2026.
Thankfully for many, Labour has frozen fuel duty, meaning there will be no higher taxes at the pump for another year.
NFRC is conscious of the strain that some Members may already be under and we know these announcements could apply further pressure. If you need to, you can access HR and legal support through our partnership with ARAG. Simply head to your member homepage on the website and select Member Support.
