Yesterday, Chancellor of the Exchequer Rachel Reeves announced Labour’s first UK Budget in 14 years. With many promises made in their manifesto around their plan to “make work pay”, it’s safe to say this was one of the most long-awaited Budgets for employers up and down the country.
Here is a round-up of the key points from the UK autumn Budget that HR and business leaders should know.
The big hitter for organisations revolves around changes to National Insurance. In January 2024, the employee National Insurance rate was cut from 12% to 10%. As announced in yesterday’s autumn Budget, these lower employee NI rates will remain and instead, rates will increase for employers. From 6 April 2025, the main rate of employer’s National Insurance contributions (NIC) will increase from 13.8% to 15%.
In addition to the increase in employer NIC rates, from 6 April 2025, the Secondary Threshold (the employee earnings amount at which employers start to pay NI contributions) will be lowered substantially from £9,100 per year to just £5,000 per year. This means employers will have to pay National Insurance contributions a lot sooner and to a lot more employees.
However, to help support SMEs with both the increase in employer NI rates and the significant drop in the Secondary Threshold, from 6 April 2025, the employment allowance will be increased from £5,000 to £10,500 per year. Eligible employers can offset the employment allowance against their NIC liability.
In addition, the employment allowance is currently only available to employers whose annual NIC liability was less than £100,000 in the previous tax year. From 6 April 2025, this threshold will be removed.
Coming as another cost to employers is the planned increase in the National Living Wage. From 6 April 2025, the hourly rate will increase as follows:
| Age | Current | From 6 April 2025 | Percentage increase |
| Apprentice | £6.40 | £7.55 | 18% |
| 16-17 | £6.40 | £7.55 | 18% |
| 18-20 | £8.60 | £10 | 16.3% |
| 21+ | £11.44 | £12.21 | 6.7% |
Currently, if an employer offers benefits in kind, they must report them via P11D and P11D(b) forms at the end of each tax year. It was announced in the autumn Budget, however, that from April 2026, using payroll software to report and pay tax on benefits in kind will become mandatory – albeit as a phased approach.
This will see employers report benefits in kind in real-time at the end of each pay period through the Full Payment Submissions (FPS) and, if required, make any necessary adjustments to in-year discrepancies using the remaining Full Payment Submissions for the tax year.
The existing freeze on income tax and NIC thresholds until 2028/29 tax year (put in place by the previous government) has not been extended – despite talks that it would. Following 2028/29, the thresholds will increase in line with inflation.
The existing employer NIC relief scheme for organisations hiring qualifying veterans will be extended for another year to 5 April 2026. This means that businesses will continue to pay no employer NICs up to annual earnings of the Veterans Upper Secondary Threshold of £50,270 for the first year of a veteran’s employment in a civilian role.
From April 2025, the weekly earnings limit for Carer’s Allowance will be increased to 16 hours at the National Living Wage, which will be worth an extra £45 a week. This is set to make over 60,000 carers eligible for support.
The government confirmed it will introduce legislation to change who has responsibility for Pay As You Earn (PAYE) payments when an employee uses an umbrella company from April 2026. Under the new legislation, the responsibility will fall to the recruitment agency that engages the umbrella company, or the end client business where there is no agency.
The existing company car tax (CCT) incentives will be maintained until 2028 – so lower benefit in kind tax will remain compared to non-electric vehicles.
For the 2028/29 tax year, CCT rates will increase by 2 percentage points for zero-emission vehicles (ZEVs) and by 1 percentage point for all other vehicles up to a maximum appropriate percentage of 38%.
CCT rates will then increase by an additional 2 percentage points for ZEVs and 1 percentage point for all other vehicles for 2029/30 up to a maximum appropriate percentage of 39%.
The rates for vehicles that produce 1-50g CO2 per kilometre, which are also capable of operating for 2028/29 to 2029/30, will be removed. Changes should be automatically reflected in tax codes for the tax year starting 6 April 2028.
The current business rate discount of 75% (due to expire in April 2025) will instead be replaced by a new discount of 40%. Additionally, a 40% relief on business rates for retail, hospitality, and leisure was announced and legislation will be introduced to remove business rate reliefs for private schools from April 2025.
Finally, it was confirmed that the main rate of corporation tax will be capped at 25% for the remainder of this Parliament, with small profits rate and marginal relief remaining unchanged.
With the announcements in the 2024 autumn Budget causing many implications for employers, you may wish to speak with an HR professional to ensure you remain compliant and discover where you could save on some costs. Our friendly team at Vero HR is always happy to help – contact us today.
