30 October 2024
The long awaited Budget by the first female Chancellor of the Exchequer has mostly delivered what the speculation expected, with a few surprises added in. Here we summarise the key points, including the employer NI increase.
National Insurance (NI) Unchanged for Working People
Rachel Reeves confirmed that the Labour party would keep their manifesto pledge to keep the rates of National Insurance (NI), Income tax and VAT unchanged, for working people.
Employer's National Insurance Will Increase
The rate of employer’s NI contributions (NICs) will increase by 1.2 percentage points to 15% from April 2025. The second hit to employers, in addition to this NI rise, comes with the lowering of the secondary threshold (ST), which means employers will start to pay NICs on employees earnings from £5,000 instead, of the current £9,100 threshold.
How Will National Insurance Changes Impact Small Businesses?
Both changes put additional pressure on small businesses on top of increasing costs in other areas, such as the National Minimum Wage increases. It does, however, make the savings available from some salary sacrifice arrangements, such as pension contributions, more appealing.
In order to support small businesses, the Employment Allowance (EA) will be increasing from £5,000 to £10,500 and the current Employment Allowance cap will be removed. Meaning employer’s with employers NIC liability over £100,000 in the previous tax year, but would be otherwise eligible, will now be able to claim the £10,500 EA.
Information provided in this news article may be subject to change. Please make note of the date of publication to ensure that you are viewing up to date information.