Autumn Budget

Key announcements and updates

Autumn Budget introduction

The first budget from a Labour government in over a decade brought about a budget focused on looking to restore the country’s public services and finances, and this meant a large tax rise aimed at businesses and the wealthy in carrying that burden.

When looking at the details, a large portion of that burden comes in the form of an increase to Employers National Insurance Contributions, a reported £25bn.

So, from April 2025, employers will see the NIC rate increase from 13.8% to 15%, meaning an extra 1.2% on an employee’s applicable earnings. On top of that, the range for these contributions is expanding, as the secondary threshold will drop from £9,100 to £5,000. This means an additional £4,100 of earnings will be subject to the new rate, costing businesses an

extra £615 annually per employee whose earnings exceed the current threshold. This percentage increase and more of an employee’s earnings being included in the calculation feed into this reported £25bn.

However, the limit on businesses who can claim the Employment Allowance has been removed, so larger employers will now be able to claim the allowance which was previously only available to employers with a National Insurance Contribution bill of £100,000 or less. The allowance has also increased from £5,000 to 10,500 which is a small concession but is something back for employers.

Another expenditure for businesses, which will also indirectly go on their tax bill, will be the increase in the National Living Wage and National Minimum Wage to the respective age groups. It will be more money to employees but

also still contribute to the employer’s tax bill.

With the increases the new government has introduced, it's also looking to make sure that HMRC receive the funds that it's hoping to raise, as it invests in HMRC’s capacity to ensure compliance and reduce fraud. Expect to see changes in reporting and requests for further information as HMRC increases its staffing levels.

The latest budget introduces several key changes to National Insurance (NI) and taxation policies that will impact employers and employees alike.

Here’s a summary of the most notable updates effective from April 2025:

The rate of employer’s National Insurance Contributions (NICs) will rise by 1.2%, bringing it to 15%.
The Employer’s NI Secondary Threshold will decrease from £9,100 to £5,000. This change, alongside the rate increase, means a higher NI burden for many businesses.
The Employment Allowance will increase from £5,000 to £10,500, and the current £100,000 threshold for eligibility will be removed.

All other eligibility requirements remain unchanged.
Income tax and NI thresholds, currently frozen, are not set to extend beyond the 2028/29 fiscal year.
Employer's NI relief for employing veterans has been extended for an additional fiscal year, continuing the support for businesses employing veterans.
Lower Earnings Limit (LEL) and Small Profits Threshold will increase by 1.7%, following September’s Consumer Price Index (CPI) rate, beginning in the 2025/26 tax year.
The Married Couples Allowance and Blind Person’s Allowance will be uprated by 1.7% starting from 6 April 2025.

Tax and National Insurance changes

These changes will raise employment costs for many businesses, particularly due to the combined effect of the increased Employer NI rate and lowered Secondary Threshold.

However, smaller employers will see some relief with the increased Employment Allowance and removal of the eligibility threshold, allowing more businesses to offset costs.

The increased Employer NI rate also highlights the potential benefits of salary sacrifice schemes, such as those for pension contributions, which become more appealing under higher NI rates.

Although these threshold increases won’t take effect immediately, the anticipated changes offer a sense of stability for employees, with the promise of higher thresholds in future tax years.

However, employers may wish to manage expectations, as the adjustments will be phased in gradually over the coming years.

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National Minimum Wage

In line with recent budget announcements, the National Minimum Wage (NMW) rates will be adjusted for the upcoming fiscal year. These changes reflect the government’s commitment to supporting lower-wage workers and addressing cost-of-living pressures.

Below, we’ve outlined the new rates, effective from April 2025, to help employers prepare for compliance and budgeting.

Category of worker	Rate effective 1 April 2025	Increase
National Living Wage (21 and over)	£12.21	£0.77
NMW 16-17	£7.55	£1.15
NMW 18-20	£10.00	£1.40
Apprentice	£7.55	£1.15
Accommodation offset	£10.66	£0.67