On Wednesday 30^th October, Chancellor Rachel Reeves laid out Labour’s 2024 autumn budget to Parliament. In her opening statement, Reeves announced that the budget is set the raise taxes by £40 billion.

Other changes include rises in National Insurance and employment law amendments, and so it’s crucial employers and HR professionals are aware of what they are and how they are set to impact employees lives.

To make things easier for employers, here’s a breakdown of the changes that are set to impact businesses, employment law, and employees directly, before an overview of the others Reeves has announced. We hope you find it helpful!

Changes set to affect businesses and employers

National insurance

• Employers’ national insurance contributions will rise by 1.2% to 15% from April 2025 - Reeves claims those measures will help raise £25bn a year by the end of the forecast period, increasing the budget for public services

Before the budget, employers were liable for a rate of 13.8% of workers’ earnings above £175 a week.

Income tax

• Reeves says the government will increase personal tax thresholds on income tax and national insurance in line with inflation from 2028-29.

Minimum wage

• Reeves confirms that national living wage will increase by 6.7% to £12.21, equivalent to £1,400 a year for an eligible full-time worker.

NHS

• Reeves promises a 10-year plan for the NHS in the spring, targeting 2% productivity growth next year.
• She announces a £22.6bn increase in the day-to-day health budget, and £3.1bn increase in the capital budget. That includes £1bn for repairs and upgrades and £1.5bn for new beds in hospitals and testing capacity.

It’s important to note that we are still seeing a growing demand for employer-led healthcare in the UK, and that this show no signs of even following an increase in NHS funding.

Business taxes and non-doms

• The government will introduce permanently lower business rates for retail, hospitality and leisure businesses from 2026-27. Until then they will receive 40% relief on business rates up to a cap of £110,000.
• Employment allowance will be increased from £5000 to £10,500, reducing national insurance for smaller businesses.
• Taxes on carried interest, generally paid by private equity managers, will rise from 28% to 32% from April.
• Reeves confirms the oil profits levy will be increased to 38%, and extended.
• The concept of non-domicile residents will be abolished from April.

Maternity, paternity, adoption and shared parental pay

• Pay for those on maternity, paternity, adoption and shared parental leave will rise from £184.03 to £187.16, as of April 2025.

Statutory sick pay (weekly)

• Statutory sick pay is also set to rise, from £116.75 to £118.73.

Childcare support

• The Budget also provides an additional £1.8 billion to continue the expansion of government-funded childcare support for working parents in England. This is designed to support parents, particularly mothers, to stay in and return to work, with the OBR forecasting that an additional 60,000 will enter work by 2028.

Return to work scheme

• £240 million will be invested to trial new ways of getting people back into work. The government will test new approaches and collect robust evidence on how to tackle the root causes of ill-health related inactivity, support young people who are ‘not in education, employment or training’ (NEET),and help people to develop their careers.

Employment support for disabilities or health conditions

• £240 The government will invest £115 million in 2025-26 to deliver a new supported employment programme matching people with disabilities orhealth conditions into vacancies and supporting them to succeed in their roles.
• The government will set out reforms to the health and disability benefits system early in 2025 to ensure the system supports people who can work to remain in or start work, in a way that is fair and sustainable

Personal development opportunities

• The government is committed to addressing skills challenges alongside supporting people into work. In the Budget, the government is going further by providing an additional £300 million for further education in England, while increasing the core schools budget by £2.3 billion, which increases per pupil funding in real terms.
• The government will also invest £40 million to help new foundation and shorter apprenticeships in key sectors.

Women in the economy

The government is committed to increasing women’s labour market participation, addressing pay inequalities, and ensuring women can realise their full potential and progress in the workplace. To help realise these goals, the budget has laid out the following plans:

• Women, who represent around 60% of minimum wage jobs, will especially benefit from the 6.7% increase in the National Living Wage.
• Women’s employment rights will be strengthened, including enhanced dismissal protections for pregnant women and new mothers

Employment Rights Bill

• The government will make it easier for parents to share childcare responsibilities, making flexible working the default and provide guaranteed day-one parental leave.
• Large employers will also be required to take proactive steps to address their gender pay gaps and support employees through the menopause.
• Carers, who are predominantly women, will have greater flexibility to manage both employment and caregiving responsibilities through reforming Carer’s Allowance to increase the weekly earnings limit to the equivalent of 16 hours at the National Living Wage
• 60,000 parents, and particularly mothers, in England are expected to re-enter the workforce and 1.5 million mothers are expected to increase their working hours by 2028 as a result of the expansion of government-funded childcare.
• 3,000 new school-based nurseries will improve the accessibility and affordability of childcare for parents.
• Breakfast clubs in thousands of schools in England will further assist working parents, while ensuring that more children start their school day ready to learn.
• Reviews of the parental and carer’s leave systems offer further opportunities to better support women and working families.

Flexible working

The Make Work Pay scheme, announced in the Employment Right Bill on October 10th the first phase of delivering the Plan has been laid out to modernise the UK’s employment rights framework in response to the changing world of work, including by making flexible working the default, establishing a new right to bereavement leave, and making paternity and parental leave available from day 1 of starting a new job.

For a more detailed breakdown, check out our article on the changes announced in the Employment Rights Bill.

Other changes announced

Even those that will not directly impact employment law and businesses can have a major affect on people's personal lives, financial security, health and wellbeing. It's important for employers to consider how they too might affect employees.

Capital gains and inheritance tax

• Capital gains tax will be increased. The lower rate will be raised from 10% to 18%, while the higher rate will rise from 20% to 24%. However, there will be no increase on the 24% capital gains rate imposed on second properties.
• The government will extend a freeze on the threshold for inheritance tax, allowing £325,000 to be inherited tax free.
• There will be tax raises worth £2bn from reforming reliefs for business and agricultural assets. After £1m, those assets will attract inheritance tax of 20%. 

Tobacco and alcohol

• The government will implement a levy on vapes, which will be increased in line with tobacco.
• Tobacco taxes will rise by 2% above retail prices index (RPI) measure of inflation for the rest of this parliament, and tax on hand-rolling tobacco will increase by 10%.
• Taxes on alcohol will rise in line with the RPI. However, Reeves announces a cut in draught duty by 1.7%, which she says is a penny off a pint in the pub. 

Fuel duty

• Reeves says increasing fuel duty next year would be the “wrong choice”, so she extends the freeze for a year and maintains the last government’s 5p cut.
• Fuel duty was frozen between 2011 and 2022, and cut by 5p in March 2022 after Russia’s full-scale invasion of Ukraine.

Private school fees

• VAT will be brought in on private school fees in January 2025.

Schools and education

• Reeves says the Department for Education will receive £6.7bn, a 19% real-terms increase. That includes £1.4bn to rebuild schools in the greatest need.
• The schools budget will increase by £2.3bn to support the hiring of teachers.
• There will be £2.1bn for school maintenance, a £300m increase.
• Reeves announces a £1bn uplift in funding for special needs.
• There will be another £300m for higher education.

Housing

• The government will spend £5bn on housing, including increasing the supply of affordable housing.
• The government will reduce right-to-buy discounts, and local governments will retain the earnings from council housing sales to allow them to reinvest.
• The government will hire “hundreds of new planning officers” to accelerate housebuilding.

Transport

• Reeves commits to the Transpennine Route Upgrade, improving capacity at Manchester Victoria, and electrifying the Wigan to Bolton route. She also promises to support east-west rail link between Oxford and Cambridge.
• Reeves confirms the government will fund tunnelling of HS2 to London Euston.
• There will be a £500m increase in the roads budget next year to target potholes.

Energy

• Reeves announces £3.4bn for the warm homes plan to upgrade buildings, lowering energy bills.
• The government will fund Great British Energy, a new body to be based in Aberdeen.

Public spending

• There will be a 1.5% increase in real spending on government departments, and 1.7% when including capital spending.

Defence

• Reeves announces a £2.9bn increase in military spending next year, as well as funding for second world war commemorations next year.

Local government

• There will be £1.3bn for additional grant funding for local government, including £600m for social care.
• Greater Manchester and the West Midlands will get integrated settlements next year, allowing them to take more control of their spending.

Public investment

• Reeves says more public investment is needed in the UK. A new rule will target debt falling as a share of the economy. She confirms that debt will be measured as public sector net financial liabilities, recognising benefits from investments.
• The rule will apply in 2029-30, and then net financial debt will fall by the third year of every forecast.
• There will be regular reports on government investments from the OBR.
• She says the government will invest £1bn in aerospace, £2bn in automotive to support electric vehicles, and £500m for life sciences.
• Reeves adds the government will invest £6.1bn in funding in sectors such as engineering, biotechnology and medical science.

Planes and private jets

• Air passenger duty will increase by up to £2 for each economy short-haul flight, Reeves says.
• Private jets will attract an extra 50% air passenger duty, up to £450 per passenger for a flight.

Compensation schemes

• Reeves says the government will compensate victims of the infected blood scandal with £11.8bn, and there will be another £1.8bn for victims of the Post Office Horizon IT scandal. 

Other measures

• Reeves says the government will raise £6.5bn through targeting tax avoidance, including by umbrella companies.

OBR

• Reeves says Labour inherited a £22bn “black hole” with allegedly unfunded pledges by the Conservative government.
• The Office for Budget Responsibility (OBR), the government’s budget watchdog, has published a review saying that the previous government did not disclose details of spending. Those details would have made forecasts “materially different”, Reeves says.
• Reeves says the government will implement 10 recommendations from the OBR’s review.

Inflation and growth forecasts

• The chancellor will maintain the Bank of England’s 2% target for inflation.
• Inflation will average 2.5% in 2024, rising to 2.6% in 2025, before gradually dropping to 2% in 2029, according to OBR forecasts. Inflation was at 1.7% in September, below the Bank of England’s 2% target, and down from 11% in October 2022.
• The OBR slightly upgrades its growth forecast for this year, but adjusts them down in later years. GDP growth is forecast to be 1.1% in 2024, then 2%, 1.8%, 1.5%, 1.5%, and 1.6% in 2030, Reeves says. At the spring budget under the then Conservative chancellor Jeremy Hunt the OBR had forecast 0.8% growth this year, 1.9% in 2025, and 2% in 2026. 

Government borrowing

• Reeves announces new rules to not borrow for day-to-day spending. The current budget will be balanced within three years of forecasts.
• The government will run a deficit of £26.2bn in 2026, but will achieve a surplus of £10.9bn in 2027-28, £9.3bn in 2028-29 and £9.9bn in 2029-30.
• Public sector net debt will fall from £127bn in 2024-25, falling gradually to £70.6bn by 2029-20.

We understand this is a lot of information to take on. If you have any questions about how these changes might impact employer-funded healthcare, please don't hesitate to get in touch via the button below!