The October 2024 mini-budget has introduced significant changes that will directly affect businesses and HR processes. Understanding these shifts is essential for managing costs, compliance, and employee satisfaction.
Here’s what HR teams need to know:
1. National Insurance Contributions Rising
Employers’ National Insurance (NI) rates will increase from 13.8% to 15% starting in April 2025. Additionally, the threshold at which employers begin paying NI on employee earnings will drop from £9,100 to £5,000. These changes aim to generate £25 billion annually but could strain business payroll budgets.
Impact for HR:
Increased payroll costs necessitate careful budgeting for 2025 and beyond.
Smaller businesses should explore the enhanced Employment Allowance, which rises to £10,500, as a buffer against rising contributions
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2. National Living Wage Hike
From April 2025, the National Living Wage will rise from £11.44 to £12.21 per hour. For younger workers (18–20), wages will increase from £8.60 to £10.
Impact for HR:
Employers will need to adjust pay structures and budgets to accommodate these changes.
This presents an opportunity to review benefits packages and retain talent as higher wages impact competitiveness
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3. Pensions and State Support Adjustments
The state pension and statutory benefits will rise by 4.1%, reflecting inflationary pressures. This provides additional security for employees but also affects HR planning for employer-provided benefits.
Impact for HR:
Communicate these changes effectively to employees to enhance engagement and understanding.
Consider reviewing company pension schemes to ensure they remain competitive
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4. Training and Talent Development Incentives
The government is increasing investment in education, allocating over £6 billion for teacher recruitment and skills development. This focus on upskilling aligns with broader trends of fostering workplace learning.
Impact for HR:
Leverage government-backed initiatives or partner with local education providers for workforce development.
Use this opportunity to strengthen internal training programs and fill skills gaps
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5. Cost-Saving and Efficiency Strategies
With payroll and operational costs rising, HR can play a pivotal role in identifying efficiencies. Technology, flexible working models, and re-evaluating workforce needs are key strategies.
How Swan HR Can Help
Navigating legislative changes requires strategic planning. Swan HR provides tailored support in payroll management, compliance training, and employee engagement strategies. Contact us today to prepare your business for these changes and secure your workforce’s future.
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