First published on Thursday, November 7, 2024
Last updated on Thursday, November 7, 2024
From notable wage and employer tax increases to payrolling your taxable Benefits in Kind—the Autumn Budget 2024 has officially landed. As a business owner, it’s essential you know what’s changing and what your responsibilities are.
So, read on for a breakdown of essential updates from the Autumn Budget 2024 that will impact the way you run payroll. Plus, actionable steps for managing the changes…
1. Employer NI Contributions
One of the most major changes set to impact your payroll is the increase in Employer NICs by 1.2%, to 15%, starting April 2025. Plus, the earnings threshold at which employers start paying NIC will drop from £9,100 to £5,000.
But what does this mean for your payroll costs? Let’s imagine you have 15 employees, each earning £30,000 per year.
- Under the current NIC cost at a 13.8% rate with a £9,100 threshold, your total NIC cost would be £43,263
- From April 2025, under the new NIC costs (15% rate with £5,000 threshold), your total would be £56,250
In this scenario, the annual NIC cost would increase by £12,987 or approximately £1,082.25 per month.
This is a major change, and employers will need to account for it as early as possible to accommodate for increased payroll costs.
Streamlining your payroll operations where possible can be an effective way to help you offset the additional costs.
Handling NICs is a routine part of payroll in the UK. Whether you’re doing payroll in-house or outsourcing it, make sure your process is accurate and compliant with HMRC regulations.
2. Increases in the National Minimum Wage
Based on recommendations from the Low Pay Commission, the top rate of the National Minimum Wage will increase by 6.7% to £12.21 per hour, payable to all staff aged 21 years and up from April 2025.18–20-year-olds will see a 16.3% increase to £10 per hour.
This will significantly increase costs for small business owners, and streamlining operations early will be essential for efficiently managing the change from both an administrative and budgetary perspective.
Making sure your payroll software accounts for statutory pay rates is one way to reduce the administrative burden and helps give you confidence that you’ll stay compliant when changes arrive in 2025.
This is especially important to avoid further costs in the form of financial penalties and enforcement from HMRC for non-compliance.
3. Changes to Benefits in Kind (BiK)
Starting on April 6th, 2026, payrolling your taxable Benefits in Kind will be mandatory for all your employees. These are non-cash perks for your employees, like company cars or private healthcare.
You can register early to get ahead, and there are significant benefits for doing so. For business owners, If you are currently reporting your benefits annually on a P11d form each year, why not register to payroll your benefits from April 2025 and simplify the process? The new system aims to make compliance easier and more accurate.
The government has also confirmed plans to mandate the real-time reporting of Benefits in Kind via payroll software on the same date. HMRC has advised that your choice of payroll software provider will play a central role in the success of this initiative.
With that in mind, it’s key you make sure your payroll system can support digital Benefits in Kind reporting. It’s best to do your homework early on your choice of provider. Look out for software with built-in reporting functionality, as this will allow you to more easily generate reports for HMRC, saving you time, money, and keeping you compliant.
Handle pay the smart way with BrightHR Payroll
Want to get ahead of the Autumn Budget changes and improve efficiency along the way?
Discover BrightHR Payroll, our end-to-end payroll software which simplifies payroll tasks and gives you confidence ahead of legislative changes.
Book a free demo with one of our experts or call us on 0800 470 2432 to see how our software can help your business.
