EOR News

Your Guide to Upcoming Changes in UK Business & National Insurance Rates


national insurance
01

National Insurance

The government has announced a 1.2 percentage point increase in employers’ national insurance contributions, raising the rate to 15% from April. This change, paired with a reduction in the secondary threshold from £9,100 to £5,000, aims to generate substantial revenue, contributing an estimated £25 billion annually by the end of the forecast period. Previously, employers were liable for a 13.8% contribution on employee earnings over £175 per week; with this increase, the additional funds will support public services and social programs. While this adjustment imposes additional costs on employers, it reflects a broader strategy to strengthen the social safety net and public infrastructure.

02

The Minimum Wage & Income Tax

The latest budget brings changes to income tax and minimum wage to support workers and economic stability. A reduction in the basic income tax rate boosts take-home pay, while a frozen higher rate threshold could increase tax revenues. The minimum wage will rise to £11 per hour for workers aged 23 and over in April, benefiting lower-paid sectors like retail and hospitality. Younger workers also see increases, spreading benefits across age groups. To aid small businesses facing higher payroll costs, the employment allowance has been raised, balancing fair pay with economic growth and fostering a stable economy for workers and employers alike.

Minimum wage and income tax
Inflation & Growth Forecasts
03

Business Taxes &Non-Doms

To support the retail, hospitality, and leisure sectors, the government is instituting permanent reductions in business rates starting in 2026-27, with an interim 40% relief available until then, capped at £110,000. Additionally, the employment allowance has doubled to £10,500, helping small businesses offset national insurance expenses. Private equity managers face a rise in taxes on carried interest from 28% to 32%, while the oil profits levy will increase to 38% and be extended. A notable shift is the abolition of the non-domicile tax status, effective from April, which aims to close tax loopholes and ensure fair contribution from all UK residents, regardless of domicile status, to boost revenue for public services.

04

Inflation &
Growth Forecasts

The government remains committed to the Bank of England’s 2% inflation target, with forecasts suggesting inflation will average 2.5% in 2024, peak slightly at 2.6% in 2025, and gradually decline to 2% by 2029. This aligns with recent trends, as inflation has already dropped to 1.7%, significantly lower than the 11% seen in October 2022. The Office for Budget Responsibility (OBR) has revised its growth forecast, projecting 1.1% GDP growth in 2024, with modest but steady growth through 2030. While these adjustments reflect economic challenges, the forecasts underscore a cautious but optimistic outlook for stable, long-term growth.

Business Taxes and Non Doms

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