04/11/2024
On 30th October, Chancellor of the Exchequer Rachel Reeves delivered her first Budget in Parliament with the key points over funding, investment and protecting employees.
To highlight the cost of employment, the budget confirmed National Minimum Wage increased from £11.44 to £12.21 for over 21’s and Employers National Insurance Contributions will increase from 13.8% on earnings above £9,100 to 15% on earnings over £5,000.
To put this into real terms, assuming the employee is paid National Minimum Wage, works 40 hours per week and receives 3% pension contribution, the employer will pay an additional £2,687.09 per employee or just over 10%.
If you’re total NIC bill is less than £100k, this increase can be partially offset by an increase in employers’ allowance which has increased from 5,000 to 10,500.
This 10% increase will be compounded across the entire supply chain and for most companies, this increase will need to be either passed on to customers, controlled costs reduced or absorbed by reducing margin. Clearly, the competitiveness of the business comes into contention and 2025 now has an air of unknown.
We will be working with many of our clients over the next couple months to help them prepare for 2025, addressing forecasts and budgets that are realistic, can be adopted easily and maintained by your inhouse team.
Reach out to us today to find out more.
