How the Autumn Budget 2024 Will Impact Employer Costs (and What You Can Do)
The Autumn Budget 2024 introduces significant changes that will affect employer people costs.
Here’s a breakdown of what to expect from the Autumn Budget for employers. This impacts on Limited Companies, Soletraders, CICs and Charities who employ people in the UK.
(Note if you are are a director and the only employee, check out our guidance specifically for sole director limited companies),
Key Changes
👉 National Minimum Wage Increase:
From April 2025, the minimum wage will rise to £12.21/hour, up from £11.44/hour for employees over 21.
💡 That’s an extra £1,601.60 per FTE employee per year (before factoring in NIC/Pension).
👉 Employer NICs:
From April 2025, the NIC threshold will drop from £9,100 to £5,000, and the rate will increase from 13.8% to 15%.
💡 This means you’ll pay more in NICs on employee salaries above £5,000 (unless your NIC bill is covered by the Employers Allowance)
👉 Employer Allowance Increase:
The Employer Allowance, which offsets NICs for eligible small employers, is rising from £5,000 to £10,500.
💡 If you qualify, this could eliminate your NIC costs or in some situations reduce it from 2024/25 levels.
Example of the Budget changes in action
Let’s explore the new cost of a FTE on Minimum wage assuming a 3% auto enrolment pension contribution ⬇️
👉 2024/25 (Current Year):
If Eligible for Employer Allowance: £24,321.86/year.
If Not Eligible for Employer Allowance: £26,349.80/year.
👉 2025/26 (With Budget Changes):
If Eligible for Employer Allowance: £25,971.50/year (an increase of £1,649.64/year).
If Not Eligible for Employer Allowance: £29,031.02/year (an increase of £2,681.22/year).
Key Takeaways from the Autumn Budget for Employers
👉 Minimum Wage Employees:
✅ If you have full-time employees on minimum wage firstly work out what your wage bill is likely to increase to.
✅ Start planning and budgeting for these higher costs now.
👉 Other Staff:
✅ Consider how this wage increase will impact your team.
✅ Will you adjust pay for other employees to stay competitive or maintain fairness? If so, by how much and on what basis?
👉 If You’re Eligible for the Employer Allowance:
✅ The increase to £10,500 could significantly reduce NIC costs, especially if you have a smaller team.
✅ For some employers, this will offset the rising costs entirely.
Tips to manage additional costs from April 2025 onwards
💡 Review Pricing:
Can you adjust your pricing to reflect higher staff costs and pass on increase to customers? How does this align or feed into your wider pricing strategy?
💡 Efficiency:
Could you absorb some of these costs by improving efficiency or revising other budgets?
💡 Grant Funding:
If you rely on grant funding, ensure rising people costs are reflected in your bids and budgets to avoid funding shortfalls.
A little planning now can go a long way in managing these changes effectively and ensuring your team feels valued and you have a sustainable business for the future.
NOTE: this is general guidance only (published in November 2024) – speak to an advisor/accountant directly about your specific set up.
Harriet Formby MA ACA is a Chartered Accountant, Fractional CFO and Business Mentor helping small businesses, SMEs and start-ups dedicated to changing the world for the better.
After growing disillusioned with making and managing money for faceless entities, she left the big corporate world of finance and founded Below The Line Finance in 2020 and shortly after Get Number Savvy.
Via 1:1 consultations, CFO retainers, courses, workshops and resources for companies with both micro and £1m+ budgets, she brings a more human side to finances, helping people not only see that they can make profit in an ethical way, but helping them get there too.
Clients regularly tell Harriet they’ve never had a CFO who ‘gets it’ like her, which is only strengthened when they find out that she works ‘off-grid’ by a beautiful meadow and meandering stream surrounded by a herd of retired racehorses, pet sheep, Dartmoor ponies, a rich array of wildlife and always with a dog or two close by.
