The Autumn Budget 2024, presented by Chancellor Rachel Reeves, marks a significant shift with its focus on economic stability and enhanced investment. While it offers support for working individuals, it introduces challenges for businesses, particularly through increased employer National Insurance Contributions (NICs) and changes to the National Living Wage. These developments have profound implications for human resources (HR) departments across sectors. Here’s how these changes affect HR practices and the support BM Connect can provide.

Increased Employer National Insurance Contributions (NICs):

The budget increases the NIC rate paid by employers from 13.8% to 15%, effective from April 2025. This hike in employment costs could lead employers to reconsider their hiring strategies and potentially freeze recruitment to manage increased costs.

Mariske Byrnes, MD of BM Connect, comments: “As businesses brace for higher NICs, our role is to help them optimise workforce costs and maintain compliance without sacrificing growth. Effective payroll management becomes crucial here, ensuring that businesses can adjust smoothly to these changes.”

Rise in National Living and Minimum Wages:

The announcement includes a rise in the National Living Wage to £12.21 per hour and the National Minimum Wage for 18-20 year olds to £10.00 per hour starting April 2025. While beneficial for employees, this places an additional burden on employers, especially in sectors like hospitality and retail where margins are already thin.

How BM Connect helps: We offer comprehensive payroll services that incorporate these new wage structures seamlessly into your payroll systems. Our solutions ensure that payroll computations are accurate and compliant with the latest regulations, thus alleviating administrative burdens from HR departments.

Support for Small Businesses:

The budget also increases the Employment Allowance from £5,000 to £10,500, removing the £100,000 eligibility cap. This change is designed to shield smaller businesses from some of the impacts of increased NICs.

Mariske says: “With the increase in Employment Allowance, small businesses have a buffer against the rise in employment costs. At BM Connect, we guide these businesses on how to maximise this benefit through strategic financial planning and payroll adjustments.”

Integration of Benefits in Kind into Payroll Software:

Effective April 2026, the reporting of all benefits in kind will need to be integrated into payroll software. This change mandates the collection of Tax and Class 1A National Insurance under PAYE for all benefits, streamlining the payroll process and requiring accurate benefit valuations each pay period.

Alex Nicholl, Payroll Director, BM Connect, comments on this upcoming change: “Integrating benefits in kind into payroll systems by April 2026 will streamline many aspects of payroll administration, requiring accurate ongoing valuations of these benefits. BM Connect is fully equipped to support businesses in making this transition as seamless as possible, ensuring compliance with the new regulations.”

Management Reporting and Accounts Preparation:

Changes in tax regulations and employment costs necessitate meticulous financial tracking and reporting. BM Connect’s management reporting services provide real-time insights into financial metrics, helping HR and finance teams make informed decisions about workforce management and budget allocations.

Future Planning and Strategy:

The budget’s emphasis on economic stability suggests a cautious approach towards HR planning and recruitment. BM Connect’s strategic advisory services can help businesses budget effectively, whilst considering the upcoming financial changes.

Conclusion:

The Autumn Budget 2024 introduces measures that could significantly affect HR operations, particularly in how businesses manage their workforce costs and compliance requirements. BM Connect is committed to supporting businesses through these changes with tailored management reporting, accounts preparation and payroll solutions that ensure compliance, optimise costs, and support strategic business planning.

For businesses navigating these changes, partnering with BM Connect means accessing expert advice and cutting-edge solutions that align with your specific needs. Contact us to find out how we can help your business adapt to the new budgetary requirements and continue to thrive.