Key Points of the UK Budget for Employers 2024

The UK Budget for 2024 brings several important changes that employers need to be aware of. These changes will impact wages, National Insurance contributions, and employee benefits. Here’s a detailed look at what employers need to know.

National Living Wage and Minimum Wage Increases

Starting from 1st April 2025, there will be significant increases in the National Living Wage (NLW) and National Minimum Wage (NMW). These changes are designed to ensure fair pay for workers across different age groups.

National Living Wage (for 21+ workers):

The NLW will increase by 6.7%, from £11.44 to £12.21. This increase aims to provide better financial support to adult workers.

National Minimum Wage (for 18-20 year olds): The NMW for this age group will see a substantial jump of 16%, from £8.60 to £10. This significant rise reflects the government’s commitment to improving wages for younger workers.

Rate for 16-17 year olds: The wage rate for 16-17 year olds will rise from £6.40 to £7.55. This increase ensures that younger workers also benefit from the wage adjustments.
Apprentice rate: The apprentice rate will also increase from £6.40 to £7.55, supporting apprentices in their training and development.

These wage increases mean that employers will need to update their contracts to reflect the new rates. With the Employment Rights Bill on the horizon, it’s a good time for employers to review their contracts and policies. Sapphire HR can assist with this process, ensuring that all changes are implemented smoothly and in compliance with the new regulations.

National Insurance Contributions

Another significant change in the 2024 Budget is the increase in National Insurance (NI) contributions. Currently, employers pay NI on staff earnings at a rate of 13.8%. Under the new Budget, this rate will rise to 15%. Additionally, the threshold at which employers start paying NI on workers’ earnings will drop from £9,100 to £5,000.

This means that more employers will pay more in NI contributions, which could make it more costly to hire staff. As a result, many employers might need to tighten their recruitment plans to manage these additional costs.

To help smaller businesses, the government will increase the employment allowance from £5,000 to £10,500. According to the Chancellor, this change means that 865,000 employers won’t pay any National Insurance at all next year. This increase in the employment allowance is designed to provide relief to smaller businesses, helping them to manage their NI contributions more effectively.

Employee Benefits

The Budget also includes changes to Inheritance Tax, which may impact certain employee benefits, particularly death in service benefits. Employers should review how these benefits are worded (and seek professional advice). As a Sapphire HR client, you have access to free advice on employee benefits in the partners section of this newsletter.

Sapphire HR’s HR Unlimited Package

Navigating these changes can be challenging, but Sapphire HR is here to help. Our HR Unlimited package offers comprehensive support to help you manage your HR needs effectively. From updating contracts to reviewing employee benefits, we provide the expertise and assistance you need to stay compliant and support your workforce.

With the upcoming changes in the 2024 Budget, it’s more important than ever for employers to stay informed and proactive. By understanding the key points of the Budget and taking the necessary steps to comply with the new regulations, you can ensure that your business remains competitive and your employees are well-supported.

If you have any questions or need further assistance, don’t hesitate to reach out to Sapphire HR. We’re here to help you navigate these changes and take the stress out of managing your HR needs.