Chancellor Rachel Reeves has unveiled some big changes in her Autumn Budget that are set to shake up businesses.

As the first woman to deliver an Autumn Statement and the Labour Party’s first budget in over 14 years, this announcement is historic in lots of ways. (Although what’s in it may not be that memorable…)

What’s in the budget?

One of the biggest shifts is the rise in the National Living Wage, which will jump to £12.21 an hour from 6th April 2025. This increase follows substantial hikes earlier this year and is a part of Labour’s commitment to ensuring workers earn a “genuine living wage.”

Alongside this, National Insurance Contributions will also see a hike, rising from 13.8% to 15% and lowering the threshold for liability from £9,100 to £5,000.

What does this mean? Well, it means that many employers, especially in low-margin sectors like hospitality and retail, will face significant pressures on their budgets, so HR will need to be at hand to help. With the average cost per employee estimated to increase by nearly £940 a year.

The Good News

There is a silver lining, however! To ease the burden on smaller businesses, the Employment Allowance will be raised from £5,000 to £10,500. This means that a significant number of small employers could effectively eliminate their NIC liability entirely, giving them some much-needed breathing room amidst the upcoming changes.

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