Hot on the heels of the Employment Rights Bill announced in October, the recently announced Autumn Budget 2024 brings further changes that will directly impact businesses across the UK, especially small and medium-sized enterprises (SMEs). 

The announcement includes updates to key legislation that businesses will need to keep on top of, including benefits reporting, hiring incentives and National Insurance Contributions to name a few. 

As always, Metro HR are here to help you navigate the changes and give guidance on how you and your business can stay compliant, plan ahead for the forthcoming updates and identify cost-saving strategies wherever possible. 

We share our breakdown of the most relevant Budget measures below, and some of the ways that we’ll be supporting our clients in the coming months. 

Autumn Budget 2024: Key Changes for Businesses

Mandatory Digital Reporting for Benefits in Kind

From April 2026, companies will be required to use payroll software for digital reporting and taxation on benefits in kind, marking a significant shift toward digital compliance.

Minimum Wage Increase

The national living wage will increase by 6.7% to £12.21 per hour for workers aged 21 and over, amounting to approximately £1,400 more per year for full-time employees. This is part of the government’s commitment to improve living standards but may place additional financial strain on businesses managing tight budgets.

Higher National Insurance Contributions (NICs)

Starting in April 2025, employer NICs will increase from 13.8% to 15%, with the payment threshold lowered from £9,100 to £5,000. For SMEs, this will drive up payroll expenses, potentially impacting hiring budgets and workforce flexibility.

Enhanced Employment Allowance

In response to the NICs hike, the Employment Allowance is set to increase from £5,000 to £10,500, with eligibility expanded by removing the £100,000 threshold. This adjustment aims to reduce NICs burdens and create more room in SMEs’ budgets for growth.

Autumn Budget
Small Business - Budget 2024

PAYE Responsibilities for Umbrella Company Workers

From April 2026, recruitment agencies and end-client companies will need to manage PAYE for workers through umbrella companies. This shift adds administrative responsibility for SMEs employing temporary workers.

Tighter Regulations on Employee Ownership and Benefit Trusts

New rules around Employee Ownership Trusts (EOTs) and Employee Benefit Trusts (EBTs) ensure these structures are used genuinely for employee benefits. SMEs that utilise these frameworks may need to reassess their compliance.

National Insurance Relief for Hiring Veterans

SMEs now have an incentive to hire veterans, as employer NICs for veterans’ salaries (up to £50,270) will be exempt for their first year. This makes veteran hiring financially attractive for smaller businesses.

Business Rates Relief

Businesses in the retail, hospitality, and leisure sectors will benefit from a continued 40% relief on business rates up to a cap of £110,000 until 2026-27. From 2026 onwards, the government will introduce permanently lower rates, providing more predictable financial planning for affected businesses.

Changes in Vehicle Taxation and Company Car Tax (CCT)

The Budget redefines double cab pick-up trucks as cars for tax purposes and introduces higher CCT rates, particularly affecting zero-emission vehicles. This could encourage SMEs to switch to more eco-friendly fleet options.

Suggested Updates to Processes and Procedures 

In light of the forthcoming changes, there are a number of updates that we would recommend small to medium businesses consider implementing to stay on top of the new legislation. 

Whilst we work closely with all of our clients to help them determine the best course of action for their unique business needs, the below are some generic items we would suggest at this stage. 

  • Review your payroll costs and what the impact of the increased statutory national minimum/living wage rates will be.
  • Run a financial impact analysis around the upcoming changes to NIC (National Insurance Contributions). Where necessary, seek support from a HR Consultant or your account/payroll provider around the expanded Employment Allowance to reduce NIC liabilities. 
  • Explore ways that your business could take advantage of the National Insurance Relief by hiring veterans. This also serves as an excellent way to diversify the workforce. 
  • Review payroll software and ensure it is in line with the new digital reporting guidelines for benefits in kind, to reduce risk of non-compliance penalties 
  • Ensure you will remain compliant around the new PAYE obligations for umbrella companies – review contracts and seek support from a HR Consultant if you need further guidance. 
  • Review and audit current benefits packages – look for ways to streamline offerings and simplify reporting for the new requirements. This will also benefit employees in the long-run by ensuring benefits packages are impactful and manageable. 
  • Consider offering ‘green’ incentives, for example electric vehicles or public transport subsidies, appealing to eco-conscious employees and customers alike. 
  • For businesses with company vehicles or a fleet of vehicles, reassess your policies and look for ways to bring in hybrid or zero-emission options to optimise tax benefits and reduce environmental impact. 
  • Consider flexible staffing solutions, such as part-time or contract roles, to help control and reduce payroll costs. 
  • Review and ensure that your businesses use of Employee Ownership and Benefit Trusts align with the new regulations, in order to avoid penalties and ensure that benefits go to employees as intended.

Ensuring the Long-Term Success of Your Business 

We know there’s a lot to think about, with changes from both the Employment Rights Bill and the Budget announcement on the table, and the October update to Sexual Harassment legislation now in force, too.

There’s challenges and opportunities here, though. Many of the ideas laid out above can offer growth opportunities for business, encouraging better financial management and even streamlining and simplifying the workforce. 

At Metro HR, we work closely with our clients to help them stay compliant and ensure their long-term success. We’re always looking for ways to help businesses turn legislation-related obstacles into stepping-stones for increased growth and opportunity. 

If you’d like to discuss how we could support your business to navigate through the changes, why not get in touch to book in a call. 

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