Measures affecting Employers proposed during the Autumn Budget 2024 include an increase in National Insurance rates and an increase to both the National Living Wage and the National Minimum Wage.
The Chancellor, Rachel Reeves, announced the following measures:
Employers' National Insurance
From 6 April 2025 to 5 April 2028
- The Class 1 secondary threshold (for employers contributions) will be reduced from £9,100 to £5,000 per annum.
- The rate of secondary contributions for Class 1, together with Class 1A and Class 1B rates will increase from 13.8% to 15%.
- The Employment Allowance will increase from £5,000 to £10,500.
- The restriction will be removed whereby Employment Allowance can only be claimed by employers who have incurred a secondary Class 1 NICs liability of less than £100,000.
National Insurance: employers of veterans
- The employer National Insurance contributions relief for employers hiring qualifying veterans is extended for a further year from 6 April 2025 until 5 April 2026.
Employee Ownership Trusts (EOTs) and Employee Benefit Trusts (EBTs)
From 30 October 2024
- No more clearances from HMRC on the application of s.464A CTA 2010; 'Charge to tax: arrangements conferring benefit on participator'.
- Changes made to the conditions for obtaining relief from Capital Gains Tax (CGT) on the disposal of a controlling shareholding in a company to the trustees of an EOT to:
- Ensure former owners cannot retain control of a company post-sale by retaining control of the EOT.
- Require that the trustees of a qualifying EOT are UK residents as a single body of persons.
- Take reasonable steps to ensure the consideration paid on disposal of shares to the trustees does not exceed market value.
- Introduction of a specific relief to give legislative certainty over the distributions tax treatment of contributions paid to the trustees of an EOT in order to repay the former owner for their shares.
- A small adjustment to the conditions for obtaining Income Tax relief on annual bonuses made to employees of EOT-owned companies to allow directors to be excluded from teh bonus award.
- For transfers into an EBT, three changes to the conditions to be met to ensure transfers are exempt from Inheritance Tax.
For CGT relief claims in 2024-25 for disposals to an EOT
- Individuals are required to provide additional information to HMRC when relief is claimed.
- Increase in the period within which relief can be withdrawn from former owners if the EOT conditions are breached after the disposal.
These are anti-abuse measures being introduced following the conclusion of the consultation process that commenced in July 2023.
Benefits In Kind reporting
From April 2026
- Mandatory reporting of Income Tax and Class 1A National Insurance Contributions for most Benefits In Kind (BIK) in real-time through payroll software
- Voluntary payrolling of employment-related loans and accommodation benefits only. Mandating for this reporting will occur at a later date.
- The reporting process for BIK will be through the Full Payment Submission. Draft legislation with detailed processes for this real-time tax collection will be published in 2025.
- The penalty position will be monitored during 2026-27 whilst the new process beds in.
- More data will likely be required on the introduction of the new process.
Double cab pickups
From 6 April 2025:
- Double cab pick-up vehicles with a payload of one tonne or more will no longer be treated as goods vehicles, but will instead be cars for BIK purposes.
- Transitional BIK arrangements will apply for employers who have purchased, leased, or ordered a double cab pick-up before 6 April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.
Company car benefit percentages for 2028-29 and 2029-30
- The appropriate percentages for calculating the benefit of having a company car have been announced.
- A zero-emission vehicle will increase for 2028-29 and 2029-30 by two percentage points per year.
- Vehicles producing 1g to 50g CO2 per km including hybrid vehicles will be charged at 18% in 2028-29 and 19% in 2029-30.
- All other emission bands will increase by one percentage point per year to maximums of 38% and 39% for 2028-29 and 2029-30 respectively.
Van benefit charge and car and van fuel benefit charges
For 2025-26
- These will increase in line with the September 2024 Consumer Prices Index:
- Van benefit charge £4,020.
- Van fuel benefit charge £769.
- Car fuel benefit charge multiplier £28,200.
Employee car ownership schemes
From 6 April 2026
- Legislation in a future Finance Bill will close loopholes in contrived car ownership schemes to prevent them from being used to avoid the company car tax BiK.
Umbrella companies - tackling non-compliance
From April 2026
- Responsibility for accounting for PAYE from an umbrella company used in a labour supply chain to engage a worker will move to the recruitment agency that supplies the worker to the end client.
- Where there is no agency in a labour supply chain the responsibility will sit with the end client.
- There is no change to the underlying Income Tax and NICs liability, only where tax obligations sit. This aligns the tax position for workers employed by umbrella companies with that of agency workers.
Share Incentive Plans (SIP)
From Royal Assent to Finance Bill 2024-25
- A consequential change is needed as a result of the introduction of Statutory Neonatal Care Pay (SNCP)
- The notice an employer must give to an employee regarding the possible effect of salary deductions because of a SIP must include a reference to SNCP.
National Living Wage (NLW) and National Minimum Wage (NMW)
From 6 April 2025
- Pre-Budget, the Chancellor announced increases in the National Living Wage (NLW) and the National Minimum Wage (NMW)
- NLW increases to £12.21 an hour from £11.44 (an increase of 6.7%).
- 18-20-year-old NMW rises to £10.00 an hour from £8.60 (an increase of 16.3%).
- 16-17-year-old NMW rises by £1.15 to £7.55.
- Apprentice rate NMW also rises by £1.15 to £7.55.
Official Rate of Interest (ORI)
From 6 April 2025
- The previous public commitment made by the Inland Revenue in January 2000, that the ORI rate will not increase in-year, will no longer be applicable.
- As of 6 April 2025, the ORI may increase, decrease, or be maintained throughout the year.
Useful guides on this topic
Autumn Budget 2024: At a glance
Our At a glance view to the Autumn Budget 2024
Autumn Budget 2024: Live Speech highlights
Our live feed summary of the highlights of the Chancellor's Autumn Budget speech.