SPECIAL BUDGET EDITION

Hello and welcome to a special edition of the Minerva HR Newsletter! In this issue, we’ll cover key takeaways from yesterday’s budget and explore how they may impact your business.

1. Increases to Employers National Insurance Contributions (NIC)

Yesterday the chancellor announced an eye watering high hike to NICs of 1.2% raising it to 15% with the threshold at which employers start paying NICs being lowered from £9,100 a year to £5,000 per year.

Quilter estimates that if an employee's gross pay is £30,000 then an employer will see a £865 increase in their National Insurance costs for that employee.

The total cost to employ someone on £30,000 will now be £33,750 compared to £32,884.20 under the previous contributions. If a business wanted to keep their costs to £32.884.320 an employee's gross salary would have to drop to £29,247.

Salary Sacrifice schemes where employees voluntarily reduce their taxable income in exchange for benefits like additional pension contributions, medical schemes cars or bicycles, could become increasingly attractive although some employers might keep hold of the NI savings rather than passing them back to the employee to cover the additional costs.

2. Employment Allowance

To support smaller businesses, employment allowance will be increased from £5,000 to £10,500.

To be eligible, employers must be registered as an employer and have had an NI liability of less than £100,000 in the previous tax year.

3. National Minimum Wage increases

The annual increases to the minimum wage with effect from 1 April 2025 are as follows:

• 21 and over - will rise from £11.44 to £12.21 an hour
• 18-20 - will rise from £8.60 to £10 an hour
• Apprentices - will rise from £6.40 to £7.55 an hour

This is the largest increase for under 21s on record, and is the first step towards a single rate for all adults.

4. No further freeze on personal tax thresholds

There will be no extension of the previous government’s freeze on income tax and NI thresholds. Whilst it is still a few years away this will mean the tax thresholds will be uprated in line with inflation from 2028-9 meaning you will be able to earn more before you start paying tax.

The budget included numerous other announcements, but with rising business costs and significant changes to employment regulations on the horizon, now is the time to start planning how best to navigate these changes moving forward.

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