Autumn 2024 Budget Breakdown: Impacts for Businesses and Workers in 2025

Autumn 2024 Budget Breakdown: Impacts for Businesses and Workers in 2025

With the autumn 2024 budget announced a couple of weeks ago, it’s clear that significant changes are on the way for employers and candidates, particularly in sectors like Manufacturing, Industrial & Warehouse, and Health & Social Care, which heavily rely on minimum-wage workers. Let’s explore these impactful changes coming in April 2025 and what they might mean for you.

The Double Whammy: National Living Wage and Employer National Insurance Charges (NIC)

Starting in April 2025, UK employers will feel the financial squeeze from two major shifts. First up is the National Living Wage (NLW), which will rise by 6.7% to £12.21 per hour for those aged 21 and older, and by a whopping 16.3% to £10.00 per hour for 18-20 year-olds. For full-time minimum-wage workers over 21, this translates to an annual pay bump of

approximately £1,600, benefiting over 3 million workers. While this increase is great news for employees looking to boost their earnings, it presents a fresh challenge for employers who must now navigate higher payroll costs in entry-level positions. Companies in sectors with many minimum-wage employees, like Warehousing, Manufacturing, and Health & Social Care, will need to rethink their budget allocations, staffing levels, skillset and ongoing sales prices to accommodate these higher costs.

But that’s not all, in addition to the additional pay costs to the employees, the threshold for when employers need to start paying NICs will drop to £5,000 per employee from £9,100. This creates an instant £615 increased cost for each employee earning over £9,100 per year.

On top of this threshold change, the employer NIC rate is also set to rise by 1.2%, reaching 15%. There is no upper limit for this so all pay above the threshold will be hit with this new increased rate.

A Positive Outlook for Employees and Small Businesses

For employees, the budget brought some positive news. Whilst the government has not removed the freeze on the earnings limits for income tax meaning they haven’t grown in line with inflation for another year, they have committed to not increase taxes on working people, meaning that there will be no hikes in the basic, higher, or additional rates of income tax, NICs, or VAT. This stability helps workers plan their finances without the worry of tax increases cutting into their income.

Additionally, many small to medium sized businesses will see some slight relief in their additional NIC bill as the government is raising the Employment Allowance from £5,000 to £10,500 and additionally removing the £100,000 threshold, which expands eligibility for NIC relief and means many more businesses can now claim it. This adjustment ultimately means that around 865,000 small employers will pay no NICs next year, potentially easing the cost of hiring and allowing small businesses to reinvest in their workforce.

Good News for Commuters: Fuel Duty Freeze

For those who drive to work, there’s a bonus. The government is freezing fuel duty and extending the temporary 5p cut for another year, at a cost of £3 billion. This move is aimed at supporting hard-working families and businesses, translating to an estimated £59 savings per driver in 2025-26. For employees and employers alike, this helps manage travel costs amid ongoing living expenses.

Skills Training and Apprenticeships Revamp

A new “growth and skills levy” will replace the current apprenticeship levy to fund more flexible training options and apprenticeships, especially in priority sectors. This means large businesses with a £3million plus payroll who are subjected to this levy can use up to 50% going forwards on non-apprenticeship training. For employers particularly in technical and skilled sectors, this means they can access training programs tailored to immediate workforce needs, this shift opens the door to adaptable, government-funded training opportunities, helping reduce the reliance on external hires and offering more ways to upskill and retain current employees.

Looking Ahead

In summary, the autumn 2024 budget introduces both challenges and opportunities: while wage increases and NIC adjustments will push businesses to re-evaluate costs, these changes also bring financial benefits for lower paid employees, targeted relief for smaller businesses, and expanded training options. With support measures like the fuel duty freeze and the new growth and skills levy, the government aims to ease some pressures. However, the full impact of these changes remains to be seen. As employers and workers alike adjust, it will take time to understand how these measures reshape job markets, hiring trends, and the broader economic landscape in the months and years ahead.

At Prime Appointments, we understand that the upcoming wage and NIC increases may feel overwhelming for both employers and candidates. These shifts impact hiring budgets, business planning, and candidate expectations, particularly in many of the sectors we serve, such as Industrial & Warehouse, Manufacturing, and Health & Social Care.

While we can’t change the numbers in the budget, we’re here to provide insight into current job market trends, candidate expectations, and competitive hiring strategies during this period of change. With years of experience recruiting for roles across Essex and Suffolk, Prime Appointments has a solid grasp of the local market, helping you stay informed and prepared.

If you’re navigating these changes and wondering how they could impact your hiring needs, please do get in touch—Prime Appointments is here to support you in making the best choices for your recruitment needs in this challenging environment.