Labour Government’s Autumn Budget 2024
A summary of the key announcements regarding business and employment taxes.
Overview
On 30th October 2024, the first female Chancellor, Rachel Reeves, delivered the first formal fiscal statement on behalf of the new Labour Government.
This is an opportunity for the Government to set out its strategy to deliver growth in the UK economy, avoid austerity, stabilise the economy, and lay out what tax measures and changes are required to deliver on these objectives.
The purpose of this document is to summarise some of the key announcements from the Chancellor’s Budget regarding business and employment taxes, impacting employers and workers.
National Insurance
Employers’ National Insurance contribution to increase by 1.2% to 15% from April 2025.
The threshold at which businesses start paying National Insurance on an employee’s earnings to decrease from £9,100 to £5,000.
However, the employment allowance will increase from £5000 to £10,500, which will mean 865,000 employers will pay no National Insurance at all next year.
National Living/Minimum Wage
The National Living Wage (21 and over) will increase by 6.7% from £11.44 to £12.21 from 1 April 2025
The minimum wage rate for workers aged 18 to 20 will increase to £10, (16.3% increase) and the 16–17-year-old and apprenticeship rate increasing to £7.55 (18% increase) from 1 April 2025
The Government has also pledged to move towards a single hourly rate with the 18-20 rate eventually scrapped, so businesses need to factor in further increases for April 2026, with similar percentage increases likely to be implemented.
Business Rates
The current 75% discount to business rates will be replaced when it expires in April 2025 by a discount of 40% — up to a maximum discount of £110,000.
There will be 40% relief on business rates for retail, hospitality and leisure.
Electric Vehicles
In support of electric vehicle adoption, the existing company car tax incentives will be maintained until 2028, meaning lower benefit in kind tax will remain compared to non-electric vehicles.
However, in the detail later released, for the 2028/29 tax year, the minimum percentage used to calculate the tax will increase from 5% to 7% and increase to 9% for the 2029/30 tax year.
The Vehicle Excise Duty differential between fully electric and other vehicles will increase from April 2025.
Inflation
Inflation is forecast to be 2.5% this year and 2.6% in 2025
Mandatory reporting of benefits via payroll
The Government previously announced this measure would be effective from 6 April 2026, with further details and draft legislation to be published in 2025.
Announcement confirmed all benefits (currently reported on P11D) will need to be reported via payroll with the exception of employment related loans and accommodation. Loans and accommodation will be introduced later on and the reporting process will be the same one employers use to report salary.
An end of year process will be introduced to enable amendment to taxable values that could not be determined during the tax year.
R&D Tax relief
There will be no changes to current R&D tax reliefs.
An R&D disclosure facility will be launched by the end of 2024 to enable voluntary disclosures of any previously overclaimed relief in a further crackdown in this area.
A consultation is to be launched to look at widening the advance clearance process for R&D reliefs to provide further certainty to businesses.
Corporation Tax
Main rate of corporation tax to be capped at 25% for the remainder of this Parliament; small profits rate and marginal relief remain unchanged.
Alcohol Duty
The alcohol duty on draught products is to be reduced by 1p.
We hope that you have found this a useful overview of the key Autumn Budget announcements impacting employers and workers.
We will be closely monitoring any further details as they are published.
Please do get in touch if you require any further advice or support.