How the 2024 Budget will impact businesses in our community

There were a number of measures in the Budget, delivered yesterday by Chancellor Rachel Reeves, that will impact businesses in our community.

The key changes were around National Insurance and the National Living Wage, both of which come into effect in April 2025.

Employers National Insurance Contributions will rise from 13.8% to 15%, with the threshold at which employers start paying the tax on each employee’s salary reduced from £9,100 per year to £5,000.

The reduction in the threshold means, that for every employer who pays it, there is an immediate £615 National Insurance increase per employee – along with the 1.2% rise in the rate.

In addition, the National Living Wage is also increasing – from £11.44 to £12.21 an hour for employees aged 21 and over. For someone working full time (calculated as a 37.5 hour week), that equates to £23,873.60 a year, up from £22,368.06.

For 18 to 20-year-olds, the minimum wage will rise from £8.60 to £10 and apprentices will get an increase from £6.40 to £7.55 an hour.

While these measures will increase costs for most companies, there were also some announcements that will help certain businesses.

The National Insurance Employment Allowance – which allows eligible employers to reduce their annual National Insurance liability – has increased from £5,000 to £10,500.

The Chancellor said this will mean 865,000 employers won’t pay any NI at all next year and more than one million will pay the same or less than previously.

There was also an extension to business rates relief for the UK’s hospitality, retail and leisure sectors – although down from 75% to 40% – with a planned rates reform intended to “protect the high street, encourage investment and create a fairer system.”

Many will also be pleased at the promise that Corporation Tax will not rise above its current headline rate of 25% for the duration of this Parliament.

If you’d like to find out more about how the budget will impact your business, please make an appointment to speak to one of our business advisers. Our team provide free one-to-one support and advice all year round for businesses of all shapes and sizes to help them grow and flourish.