What the Autumn Budget means for employers, employees and benefits

It’s been less than a week since the latest UK budget, and the first from our new Labour Government. And even though many of the announcements had been widely anticipated, it's fair to say that the dust is still settling across the country. 

Aiming for a “decade of national renewal”, new Chancellor Rachel Reeves had previously been vocal about the need to raise £40bn to fund the Government’s manifesto pledges without increasing income tax or National Insurance for employees. 

But now that the Autumn Budget has fully outlined the areas we can expect to see spending, taxes and cuts in the near future, UK businesses have a lot to consider. Here are a few of the headlines that could affect employers across the country:

• UK taxes will rise by £40bn
• Income tax and National Insurance (NI) paid by employees, and on VAT, to remain unchanged
• But from April 2025, employers’ NI contributions will rise from 13.8% to 15%
• Secondary threshold to reduce from £9,100 to £5,000 when NI contributions are due
• National Minimum Wage to rise from £11.44 to £12.21 per hour from April 2025
• Pensions contributions still won’t be taxed, however from April 2027 pensions can be drawn into an estate for inheritance tax

But what do these changes mean in the long term and how can organisations and their People teams look to navigate the new economic landscape? Here are just a few of the ways in which you can mitigate against new challenges and explore new opportunities following the Autumn Budget.

Offset National Insurance contributions with salary sacrifice benefits

Changes to National Minimum and Living wages have been welcomed by many, but there is no denying the additional pressure these place on businesses. This pressure has also been compounded by the reduced threshold that companies must begin paying National Insurance for employees, as well as the increased percentage of NI contributions themselves. 

This news has been more significant for organisations with employees on lower salaries, particularly for those with a large proportion of their workforce on National minimum wage and/or National Living wage who could be looking at an additional impact to their payroll. Some industries in general, such as retail, hospitality and manufacturing, will also be more affected than others.

While the rise in NI contributions has undoubtedly turned up the financial pressure on employers, it has also increased the untapped value of exploring salary sacrifice benefits. Not only can organisations better support their people and boost mental, physical and financial wellbeing through salary sacrifice benefits, but they can also offset some of the additional costs by reducing NI contributions. 

Exploring benefits such as Cycle to Work, Holiday Trading and SmartTech™ can help companies to boost employee experience, support wellbeing and reduce business costs at the same time. 

Maximise the value of your rewards programme

Earlier this year, 67% of HR managers in the UK revealed that a lack of budget was their largest roadblock and that they were expected to “do more with less”. Already feeling the squeeze, these new announcements may not do much to boost HR budgets, and with businesses now paying more NI, maximising the value and impact of your existing Recognition & Reward pot is going to be crucial going forward.

We recommend using our Employee Reward Programme Calculator to estimate any adjustments in commitment you might need to make.

Recognition & Reward programmes provide an alternative way to boost the financial wellbeing of your people at a time when pay rises will now be even more expensive to the employer. But it’s not just about building a robust and easy-to-use programme, you’ll also need to be able to ensure it takes off within your organisation and becomes second nature to your people. Driving usage of your platform by communicating its value is key, and how to do this will differ for all businesses.

Our team of employee experience experts are always on hand to assist you in building the communications plan and campaigns that best suit your workforce. 

Keep an eye on the future

Political and economic developments always have the potential to rock the boat, but it’s important to note that even the changes outlined in last week’s Autumn Budget won’t come into effect until April 2025. Keeping a close eye out for further information from the government, as well as from the Low Pay Commission will help shed some more light on the road ahead. 

And there is still time to plan and put initiatives in place that can help to limit the impact of these changes on your organisation and your People strategy. While it can be challenging to operate in the every-evolving external landscape of HR, Reward Gateway | Edenred offers ways to innovate and create a People strategy that can bring stability to your employee experience.

Signpost the changes and helpful resources to your people

Not everyone is going to be as tuned into the news as the key decision makers within your organisation. But these changes are going to affect employees as well as their employers - so keeping them informed of anything that could affect their personal circumstances, such as the below, can be really valuable. 

What else could affect our employees?

• Carer’s allowance earning limit to rise to £196 per week (or £10,000 a year) from April 2025, 
• Extension of Help to Save scheme
• Cut in residential stamp duty thresholds due in March 2025
• Basic and new State Pension will increase by 4.1% in 2025-26, in line with earnings growth
• £2 cap on single bus fares in England to rise to £3 from January 2025, outside London and Greater Manchester

The cost of living is still extremely high in comparison to just a few years ago, and in the run-up to Christmas, financial stress is always something to watch out for. By providing access to a financial wellbeing platform such as nudge, you can offer your people impartial, global financial education that can reduce stress and support them through these challenging times.

How will the Budget affect Public Social Programmes?

The Budget also saw the Government commit to extending Household Support Funding in England and Discretionary Housing Payments in England and Wales (including Barnett implications to Scotland, Wales and Northern Ireland) by a further year to March 2026. This will provide £1bn for local authorities through 2025-2026.  

This extension has been warmly received by many, despite the growing appetite for a permanent funding settlement that would provide a more long term solution. However, the commitment through to 2026 ensures Reward Gateway | Edenred can continue to deliver higher levels of targeted financial support payment to those in need with our public social programmes. 

Discover our range of public social programmes solutions, including welfare support, grocery payments, Home to School, YourChoice and more. 

While we now have our first Budget from the new Government and some more clarity on what to expect in 2024 and beyond, there are likely still plenty of opportunities and challenges awaiting the HR community.

Speak with one of employee experience experts today to find out how you can maximise your employee experience initiatives and drive engagement with your platform no matter your budget.