New UK Budget -
what does it mean for employers and employees?
On 30th October, UK Chancellor Rachel Reeves delivered the much-anticipated Autumn 2024 budget, laying out her vision for the UK’s financial roadmap for the coming year and beyond, touching on key changes that will impact both employers and employees alike.
Whether you already have employees in the UK, or are looking to hire soon, this budget will bring several updates you’ll want to be aware of. Let’s dive into what this budget means for employers and the UK workforce.
Changes for employers
One of the biggest changes facing employers is the increase in Employer National Insurance Contributions. Starting this year, the Class 1A National Insurance rate for employers will rise from 13.8% to 15%. As this increase will add to overall employment costs, it will be important for businesses to budget accordingly. This change won’t impact employees, as Employee National Insurance contributions are frozen until the 2028-29 tax year under guidelines set in place in previous budgets. The freeze also applies to employee income tax, which means no immediate tax-related costs will affect workers.
Another significant update for employers is the rise in minimum wage. The budget has introduced a notable 16.3% minimum wage increase for 18-20-year-olds, bringing their minimum hourly rate to £10.00, while the rate for workers over 21 will increase by 6.7% to £12.21. This shift is part of a broader government plan to narrow the wage gap across age groups, moving towards a single minimum wage rate for all adults.
Funding for industries
In a promising development for several sectors, Reeves announced a substantial commitment to research and development with the government pledging £20 billion in R&D funding by the 2025/26 tax year, with a strong focus on core areas like engineering, biotechnology, and medical sciences.
The budget also includes targeted investments to propel innovation in key industries, with the aerospace sector set to receive £1 billion, and life sciences to receive £500 million. The automotive industry will also receive £2 billion, aiming to accelerate the shift to electric vehicles and green technology.
Removal of non-UK domiciled tax status
In line with its focus on boosting key industries, the UK government has introduced a new tax incentive aimed at attracting skilled professionals from abroad. For new UK residents who haven’t lived in the country for the past decade, there will now be an exemption from UK tax on foreign income and gains for the first four years of residency. After this period, starting in the fifth tax year, any foreign income will be taxed like that of other UK residents.
Conclusion
With this new budget paving the way for growth in British industry and creating opportunities for talented professionals from around the world, our team is here to support your hiring and expansion needs. We offer fully compliant employment solutions in the UK to help make employee transitions seamless, so you can focus on growth in both priority fields and more niche industries alike.
Looking to expand beyond the UK? We also provide employment services in over 120 countries worldwide. Use the form to get in touch – our team is ready to help you achieve your global workforce goals!
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Written by Gibson Watts Global Delivery Co-ordinator, Mel Johns
Mel is a Finance Graduate, who has gained a wealth of knowledge working at Gibson Watts Global for the last three years. As Delivery Coordinator, Mel is responsible for liaising with clients and in-country partners to manage monthly payroll services.
As a dedicated member of the Gibson Watts Global team, Mel’s expertise lies in our shadow payroll and contractual processes, enabling her to deliver accurate, compliant, and efficient solutions with a high level of attention to detail.