30/10/2024
𝗜𝘀 𝗻𝗼𝘄 𝘁𝗵𝗲 𝘁𝗶𝗺𝗲 𝘁𝗼 𝗿𝗲-𝗲𝘃𝗮𝗹𝘂𝗮𝘁𝗲 𝘆𝗼𝘂𝗿 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗶𝗻𝗴 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆?
Today’s budget announcement introduces significant changes for employers, particularly in terms of National Insurance (NI) and payroll costs. Key points to consider include:
𝟭. 𝗘𝗺𝗽𝗹𝗼𝘆𝗲𝗿 𝗡𝗜 𝗖𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻𝘀 𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗲
Employer NI contributions will rise from 13.8% to 15%. This means that employers will incur higher NI costs on each employee’s earnings, directly increasing overall payroll expenses.
𝟮. 𝗟𝗼𝘄𝗲𝗿 𝗡𝗜 𝗧𝗵𝗿𝗲𝘀𝗵𝗼𝗹𝗱
The threshold at which businesses start paying NI on employees’ earnings will drop from £9,100 to £5,000. As a result, companies will pay NI on a larger portion of employees’ salaries, raising payroll costs particularly for lower-paid roles.
𝟯. 𝗠𝗶𝗻𝗶𝗺𝘂𝗺 𝗪𝗮𝗴𝗲 𝗮𝗻𝗱 𝗡𝗜 𝗜𝗺𝗽𝗮𝗰𝘁 𝗼𝗻 𝗠𝗶𝗰𝗿𝗼 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀𝗲𝘀
The increase in Minimum Wage, combined with higher NI costs, is expected to have a notable impact on micro businesses, who may feel the strain more acutely than larger organisations.
This budget may make hiring contractors an increasingly attractive option for managing rising employment costs while maintaining operational effectiveness.
Engaging experienced contractors Outside IR35 (off-payroll) could offer a cost-effective solution, as these workers don’t carry the same NI burden and can contribute immediate expertise with minimal onboarding.
The chancellor says businesses will "contribute more" as she raises employer National Insurance to 15%.