Autumn Budget 2024 Impact on SMEs

Posted on 6th November 2024 at 12:43

The impact of the Autumn Budget 2024 on small to medium-sized enterprises (SMEs).

Post-budget: Strategies to Consider

The Autumn Budget 2024 brings impactful changes for businesses across the UK. Small to medium-sized enterprises (SMEs) face unique challenges with the updated regulations. The changes span across National Insurance Contributions, benefits reporting, hiring incentives, and sustainability measures. This means your organisation must adapt to remain compliant and cost-effective. The key things to consider are to stay compliant, adapt your workforce strategies, and leverage available incentives to remain competitive. Our recommendations, in order to remain compliant and cost-effective, are to consider the following 2 key areas:

Our recommendations, in order to remain compliant and cost-effective, are to consider the following 2 key areas:

1. Navigating Compliance

Payroll Reporting: ensure that your payroll provider/payroll software that complies with the new digital reporting requirements for benefits in kind. This will reduce the risk of non-compliance penalties and improves payroll efficiency.

Benefits for NMW/NLW employees: Review your current benefits package and particularly check that employees on or close to NMW do not drop below this because of salary sacrifice.

Promote Benefits to mitigate NIC increases: Consider promoting salary sacrifice schemes such as Childcare (The Workplace Nursery Scheme), Cycle to work and Pension schemes – as NICs are calculated on take home pay only. Can offer significant savings.

2. Budget Impact

National Living and National Minimum Wage: Ensure that you have calculated the increase payroll costs from April 2025.

Increase in Employer National Insurance Contributions (NICs): Look at the financial impact of increased NICs which are rising from 13.8 to 15% from April 2025.

Employment Allowance: Ensure that you are working with your accountant to claim expanded Employment Allowance to reduce NIC liabilities.

Optimising Staffing Models: Consider flexible staffing solutions to control payroll costs, such as evaluating part-time or contract roles that balance workload without the full cost of permanent employees.

You may also wish to consider:

Do you employ ex-forces or veterans?

The new veteran NIC relief could bring benefits to your organisation.

Do you have Employee Ownership or Benefits Trusts in place?

You may need to review compliance in line with the updated regulations, or to consider alternative schemes such as profit-sharing.

Do you have self-employed or freelance contractors?

You may need to review the updated PAYE regulations and review contracts to align with these new standards.

Do you have temporary or agency staff?

Consider exploring cost-effective alternatives such as direct and flexible contracts.

Is sustainability important as part of your supply chain?

You may need to review fleet and vehicle policies in line with CCT increases, and/or consider green benefits packages.

These Budget-related challenges can be transformed into avenues for business growth and resilience. For further information and support on these strategies, and any impact on headcount or organisational structure, we can help. Get in touch and find out how on:

01482 738 447 - Hull & East Yorkshire

01652 240 619 - North & North East Lincolnshire

Autumn Budget - Summary of Key Changes

With the announcement of the Autumn Budget 2024, we can expect significant impact to SMEs, particularly in relation to workforce management and HR. Planning for these changes early will mean you can maintain productivity and continue to support your employees. Below we’ll go through the changes that will have the biggest impact on SMEs.

A Rise in Employer National Insurance Contributions

Employer National Insurance Contributions (NICs) will increase to 15% from April 2025, an increase of 1.2 percentage points. Furthermore, the level at which companies begin to pay NICs (the secondary threshold) will decrease from £9,100 per year to £5,000 per year.

However, it has also been announced that the Employment Allowance will increase from £5,000 to £10,500. Reeves has said that this will mean that over 865,000 small businesses will be exempt from paying any NICs.

There will be an extension to NIC relief for hiring veterans, exempting employer NICs for veterans' first-year salaries up to £50,270.

These changes will result in higher employment costs, including hiring and operational costs. Employers may need to consider more flexible workforce arrangements.

Increase to Minimum Wage

The National Minimum Wage is planned to increase by 6.7%, from £11.44 to £12.21 for over 21s. For 18-20 year-olds, the minimum wage will increase from £8.60 to £10, and apprentice wages will increase from £6.40 to £7.55.

Workforce planning adjustments may need to be made to manage these costs effectively, especially for low-margin sectors such as retail, leisure and hospitality.

Apprentices

The apprenticeship levy will be replaced by a “Growth and Skills Levy”. This will provide funding for shorter, targeted apprenticeships.

This change will be particularly useful for tech and manufacturing sectors, where frequent skill updates are required. For example, businesses will be able to implement training programs adapted to rapid technology shifts and industry needs.

Benefits in Kind

As of April 2026, it will become mandatory to use payroll software to report and pay taxes on benefits in kind. This is a push for greater digital compliance.

Business Rates

From 2026/27, the government will introduce permanently lower business rates for retail, hospitality and leisure businesses. Currently, these business sectors benefit from a 75% rate relief, worth up to a cap of £110,000 annually. This rate relief is due to expire next year, which will then be replaced by a 40% rate relief, up to the same cap of £110,000. The small business tax multiplier is set to remain frozen next year too.

Fuel Duty Freeze

The Fuel Duty freeze will be extended for another year, with the 5p discount remaining. This is especially good news for SMEs relying on logistics, transportation, or delivery services.

Vehicle Taxation

Double cab pick-up trucks (DCPUs) are being declassified as cars for tax purposes. Furthermore, incremental CCT rate increases are being introduced, particularly for zero-emission vehicles. The goal here is to push businesses towards more eco-friendly options.

PAYE Responsibilities

As of April 2026, recruitment agencies and end-client businesses must handle PAYE for workers through umbrella companies. This will increase admin responsibilities for SMEs that rely on temporary workers.

Employee Ownership and Benefit Trusts

New, stricter, regulations are being placed to ensure Employee Ownership Trusts (EOTs) and Employee Benefit Trusts (EBTs) are being used genuinely. This will impact SMEs that use these structures.

Employee Compliance

The government are also putting a focus on Employment Compliance. As of the 26th of October 2024, employers have a new duty to prevent sexual harassment in the workplace, which will require updated HR policies and other HR requirements.

You can read more about this in our blog New Duty to Prevent Sexual Harassment in the Workplace - October 2024.

Get in touch today to find out more about how we can help

If you require any support amidst all these changes as we head into 2025, we are here to help . Just give us a call on: