Highlight reel
- National Insurance adjustments
- Minimum wage changes
- Employee benefits and taxation
- Apprenticeships and skills training
- Employment law and compliance updates
- HR and payroll best practices
Decoding the National Insurance adjustments
With Budget 2024 now unveiled, HR and payroll professionals find themselves navigating many changes, especially around national insurance. The government has introduced significant shifts in employer national insurance contributions (NICs), and it's crucial to understand these to effectively manage payroll operations.
From April 2025, the secondary threshold has been lowered, meaning employers will start paying national insurance on earnings above £96. In addition, the rate for employer NICs has increased from 13.8% to 15%. This change affects both public and private sectors.
These adjustments can substantially increase labour costs — around £1,000 per employee annually for those earning an average salary of £35,000. Businesses need to reassess their budgets and plan for the additional expenses.
The impact of minimum wage changes on employers
The government has also increased the minimum wage across all age bands, with some groups seeing an uplift of up to 18%. While beneficial for employees, this increase poses additional financial challenges for employers.
For organisations that often employ younger workers, especially those in retail and hospitality sectors, this rise could lead to a jump in operational costs. Employers need to revisit their pay structures and ensure compliance with the new wage laws, keeping in mind the implications for salary sacrifices and benefits. It's a balancing act that requires strategic planning and possibly re-evaluating workforce sizes and structures.
Strategising for employee benefits and taxation
The Budget has confirmed a shift towards mandatory real-time payrolling of benefits, effective from April 2026. This change aims to simplify tax collection but requires businesses to prepare thoroughly.
HR teams will need to work closely with payroll departments and any benefit providers to ensure systems are updated and compliant. This involves setting up processes to manage benefits in real-time and communicating these changes clearly to employees. The goal is to reduce errors and ensure employees understand any changes to their payslips, maintaining transparency and trust.
Leveraging apprenticeships and skills training
The Budget 2024 also included opportunities for businesses to enhance their workforce through apprenticeships and skills training. The apprenticeship levy has been rebranded as the Growth and Skills Levy, allowing businesses to use 50% of their funds on non-traditional apprenticeships. This includes shorter courses in key areas like digital skills, social care, and green technologies.
Employers should capitalise on this flexibility, using it to address skills gaps and future-proof their workforce. By investing in training, organisations can boost employee retention and productivity, ultimately benefiting from a more skilled and adaptable team. It's a chance to rethink talent development strategies and align them with long-term business goals.
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Adapting to employment law and compliance updates
Keeping abreast of employment law and compliance updates is an ongoing challenge for HR teams. The recent budget has hinted at future simplifications in tax systems. Changes to employment rights are expected soon, with the forthcoming Employment Rights Bill, which may include adjustments to statutory sick pay and parental leave entitlements among other significant changes.
HR teams must stay informed and proactive, ensuring that all policies and procedures are compliant with the latest regulations. This might involve seeking external legal advice or reallocating internal resources to manage these changes effectively. Preparation is key, and having a clear plan can help alleviate potential disruptions to business operations.
Preparing for the future: HR and payroll best practices
As we steer through the changes brought by the 2024 Autumn Budget, HR and payroll teams must adopt best practices to remain efficient and effective. This involves strategic planning, enhanced communication, and leveraging technology to streamline processes.
Engage with payroll providers early to ensure systems are configured for new requirements, and consider conducting financial awareness training for employees to help them understand changes in their pay. Regularly review and update benefits packages to ensure they remain attractive and compliant.
Every Budget presents both challenges and opportunities for HR and payroll. By staying informed, planning strategically, and focusing on efficient practices, businesses can navigate this complex landscape with confidence.