Main Implications for Business Owners Following the Recent UK Budget

The Autumn Budget 2024, presented by Chancellor Rachel Reeves, has introduced several key changes that will significantly impact business owners across the UK. Understanding these changes is crucial for businesses to adapt and thrive in the evolving economic landscape.

Increase in Employers' National Insurance Contributions (NICs)

One of the most notable changes is the increase in Employers' National Insurance Contributions from 13.8% to 15%, starting from April 2025. Additionally, the threshold at which employer NICs apply will be reduced from £9,100 to £5,000. This means that businesses will face higher costs for employing staff, which could impact their bottom lines.

Employment Allowance Increase

To help offset the increased NICs, the Employment Allowance will be raised from £5,000 to £10,500, with the £100,000 limit being abolished. This means that smaller businesses will benefit from reduced NICs, providing some relief from the increased costs.

Business Rates Relief

The budget introduces reforms to business rates, particularly for retail, hospitality, and leisure sectors. From 2026/27, two new lower business rates will be introduced for these industries, with a 40% relief on business rates up to a maximum discount of £110,000. This aims to support high streets and small businesses in these sectors.

National Minimum Wage Increase

The National Minimum Wage will increase to £12.21 per hour for adults over 21 from April 2025, representing a 6.7% increase. This will result in higher payroll costs for businesses, which will need to be factored into their financial planning.

Impact on Larger Workforces

Businesses with larger workforces, such as retail, hospitality, and manufacturing, will be particularly affected by the increased NICs and higher payroll costs. These businesses will need to reassess their hiring strategies and consider ways to manage these additional expenses.