What the Autumn Statement means for you

1. Increased employer National Insurance contributions

The rate of employer National Insurance will increase from 13.8% to 15% from 6 April 2025. 

The Secondary Threshold, which is the level at which employers become liable to pay national insurance on each employee’s salary – will reduce from £9,100 per year to £5,000 per year.

That means that once an employee earns £5,000, you will have to pay NI at the new higher rate.  

Employment cost increases for businesses: 

Cost increase from minimum wage rise: £1,401.40

Cost increase from National Insurance increase: £965.89

Source: AJ Bell. Figures assume a business employing someone on minimum wage for 35 hours a week, not including pension contributions. Figure excludes any benefit from increased employment allowance.

2. Higher employment allowance

The chancellor announced that the Employment Allowance will increase from £5,000 to £10,500.

It will also be extended to all eligible employers by removing the £100,000 cap. This means that firms can employ up to four National Living Wage workers full time without paying employer National Insurance on their wages.

The Treasury says that this means that 865,000 employers will pay no NICs at all next year.

However, Lindsay James, investment strategist at Quilter Investors, says that this will only protect the very smallest employers. She explained: “The vast majority of small and medium enterprises in the UK will be hit.”

3. A shift to salary sacrifice

Experts are advising small businesses with employees to consider whether a switch to salary sacrifice arrangements could help shield them from the NI hike.

Salary sacrifice is a formal arrangement between an employer and an employee whereby an employee gives up part of their salary in exchange for non-cash benefits. This can include waiving some bonus entitlement in favour of a pension contribution. 

The benefits are not subject to income tax or NICs. This is beneficial for employees whose taxable income is reduced (often allowing them to avoid tax cliff edges such as the high income child benefit charge or the loss of the personal allowance), but it will also save money for businesses under the new NI rules.

Gary Smith, partner at Evelyn Partners explains: “An opportunity may arise for employers to offset some of this cost through the use of a salary sacrifice pension scheme, including bonus sacrifice, where that’s not already in place.’ 

Jon Greer, head of retirement policy at Quilter, added: “Salary sacrifice schemes where employees voluntarily reduce their taxable income in exchange for benefits like additional pension contributions or even cars or bicycles could become increasingly attractive.”

4. Increase to National Minimum Wage

The National Living Wage, currently £11.44 for workers over 21, will rise to £12.21 from April 2025. The National Minimum Wage for 18 to 20-year-olds will also rise from £8.60 to £10.00 an hour. Apprentices will see the rate go up from £6.40 to £7.55 an hour.

This is the third consecutive increase in the NLW above average pay growth.

5. Fuel duty freeze

Many small firms will be relieved at the decision not to raise fuel duty for a further year.

The government is also extending the temporary 5p cut until 22 March 2026, which it says will save the average car driver £59, vans £126 and Heavy Goods Vehicles £1,079 next year.

6. Business asset disposable relief (BADR)

The budget included the news that Business Asset Disposal Relief (BADR) will remain at 10% this year, in a bid to encourage entrepreneurs to invest in their businesses.

However, it will then rise to 14% on 6 April 2025 and 18% from 6 April 2026-27.

Accountancy firm Farnell Clarke said: “Currently entrepreneurs can benefit from the lower rate of CGT of 10% on gains up to £1 million arising from the sale of their business and assets associated therewith. The Chancellor announced this rate will be increased to 14% from April 2025 and further increased to 18% from April 2026.

7. Homebuilders

The government has promised £3 billion of additional support to SMEs and the Build to Rent sector by expanding existing housing guarantee schemes.

However, the Higher Rate for Additional Dwellings surcharge of Stamp Duty Land Tax will rise from 3 to 5% which could spell trouble for landlords.

8. Small business strategy command paper

The Budget documents include plans for a small business strategy command paper, which will be published next year. This will outline the government’s vision for supporting small businesses, including boosting scale-ups, growing the cooperative economy, and creating thriving high streets.

9. Capital allowances

The government is extending the 100% First Year Allowances for zero emission cars and EV charge points for a further year.

10. Small Business Funding Schemes

Over £1bn will be provided to the British Business Bank in 2024-25 and 2025-26, including £250m each year for Start Up Loans and the Growth Guarantee Scheme.

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