Key budget announcements – what it might mean for you and your business

2024 UK Budget announcement brought forward a number of changes set to make a real impact on the labour market. As always, we’re keeping a close eye on what these changes mean for you and your workforce, and we’ve pulled together the key points from the budget to help you understand the road ahead. From employment-related shifts to broader financial measures that could affect everything from staffing costs to business planning, here’s a rundown of what you need to know.

Increases to employers' national insurance costs

As expected, the headline change and biggest revenue raiser came in the form of changes to employers' national insurance contributions (NIC). With effect from April 2025:

• the rate of employers' NIC will rise to 15% from the current 13.8%
• the ‘secondary threshold’, above which employers' NIC is payable, will drop from £9,100 annually to £5,000, resulting in an additional £4,100 potentially subject to the new 15% rate.

Combined with the increase in NLW/ NMW rates announced, employers are faced with a twofold hit on their employment costs. 

On a more positive note, an increase in Employment Allowance from £5,000 to £10,500 from April 2025 helps in supporting smaller employers with these additional costs. 

National Minimum / Living Wage

The main rate of the NLW for those aged 21+ will increase by 6.7% to £12.21per hour from April 2025.

The Government also wishes to bring the 18-20 rate up to parity with the main rate. Steps towards this will begin with an increase of 16.3% to £10/hour from April 2025, with more increases expected in the coming years.

In the short to medium term there is the potential for this to result in a decrease in the relative attractiveness of younger, less experienced workers to employers.

Umbrella companies 

During her Budget the Chancellor highlighted the significant tax losses derived from non-compliance of umbrella companies. The Government therefore intends to position responsibility for PAYE with agencies or, where there is no agency, with end users that engage umbrella companies. 

The proposals will inevitably simplify the task otherwise faced by HMRC of navigating legal complexities around who is actually the employer but are likely to have far-reaching impacts on how the temporary labour market operates.

Capital gains tax 

Widely anticipated changes to capital gains tax (CGT) rates included increasing the lower rate of CGT from 10% to 18% and the higher rate from 20% to 24%, with effect from 30 October 2024.

Although the lifetime amount of gains eligible for business asset disposal relief (BADR) remains at £1m, the rate of CGT payable on such gains will increase from the current rate of 10% to 14% from 6 April 2025 and 18% from 6 April 2026.

Inheritance tax 

The Chancellor announced that the inheritance tax (IHT) nil rate band (currently £325,000) and residence nil rate band (£175,000) are to remain frozen until 2030. However, there were sweeping changes to business property relief (BPR) and agricultural property relief (APR).

From 6 April 2026 the first £1m of a claim for BPR and APR combined will continue to be exempt from IHT. Claims for BPR and APR in excess of £1m will attract relief at 50%, giving an effective rate of IHT of 20%. There will also be relief from IHT on 50% of the value of shares held on the alternative investment market (AIM) giving an effective rate of IHT on the value of AIM shares of 20%.

Pensions

Currently pensions are excluded from IHT. From April 2027, any value left in your personal pension pot on your death will be included in your IHT estate and taxed in the usual way. 

Income tax personal allowance and fiscal drag

The government has decided not to not extend the freeze on income tax and national insurance thresholds beyond April 2028. From April 2028, personal tax thresholds will once again increase by the rate of inflation.

Stamp duty land tax

Buyers of second homes and buy-to-let properties in the UK are faced with an immediate increase in stamp duty land tax (SDLT). With effect from 31 October 2024, the higher rate for additional dwellings (HRAD) increases from 3% to 5%.

Private equity

The Chancellor has opted for a staged approach to carried interest tax, raising the rate to 32% from April 2025 - much lower than the feared 45%. However, the main announcement was the delay of significant changes to carried interest taxation to bring it into the income tax framework. A more targeted, fairer, and simpler regime is promised, likely starting in April 2026.

Business taxation

The Chancellor confirmed the main rate of corporation tax will remain at 25% for the life of this parliament.

On capital allowances, there is a commitment to retain permanent full expensing with the prospect of consultation on extending full expensing to leased assets, simplifying the legislation more broadly, and launching a consultation to review the effectiveness of land remediation relief. 

VAT and other indirect taxes 

VAT-related announcements in the Chancellor’s speech were limited to reconfirming that VAT will be added to private school fees with effect from 1 January 2025.  

The Chancellor also announced increases to air passenger duty on economy short haul flights and private jets, and excise duty on tobacco. These increases were accompanied by more welcome announcements on extending the 5p cut on fuel duty for a further year, and a cut to duty on draft beer. Further low-profile tweaks to VAT and other indirect taxes may emerge in the published detail following the Chancellor’s speech.

Supporting you through the changes

We’re here to guide you through these legislative updates and will be ready to consult with you on how the new measures will impact your rates from April 2025. Our transparent pricing models — already factoring in Employers' National Insurance thresholds — are designed to adapt seamlessly, ensuring you have a clear and straightforward breakdown of costs.

Rest assured, our temporary workers are paid on a PAYE basis with no reliance on umbrella schemes, reflecting our commitment to being a compliant and reliable part of your supply chain.

As always, we’ll continue to monitor any further developments closely and keep you updated with any new information. Please don’t hesitate to reach out with questions or for additional support—we’re here to help.