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Understanding the Financial Implications of the UK Budget 2024 for Individuals and Businesses

By October 31, 2024No Comments

The UK government, led by Chancellor Rachel Reeves, announced the Autumn Budget 2024 on October 30, 2024, focusing on both immediate relief for individuals and long-term support for businesses. Here’s a breakdown of the financial implications for both sectors.

Key Measures for Individuals

  1. National Living Wage Increase: The National Living Wage will rise from £11.44 to £12.21 per hour for those aged 21 and over, effective April 1, 2025. This represents a significant increase and aims to provide more financial support for workers amidst the rising cost of living (Financial Times, 2024) (Gov UK, 2024).
  2. Universal Credit Adjustments: The government will limit reductions to Universal Credit awards, ensuring that vulnerable families receive necessary support without abrupt cuts. This move aims to stabilise financial security for low-income households (Financial Times, 2024).
  3. Help to Save Scheme Expansion: The expansion of the Help to Save scheme is designed to assist low-income earners in saving money, which could lead to improved financial stability over time (Financial Times, 2024) (Gov UK, 2024).

Key Measures for Businesses

  1. Employer National Insurance Contributions (NIC): Starting April 2025, employer NIC will increase from 13.8% to 15%. Additionally, the secondary earnings threshold for NIC will drop from £9,100 to £5,000. While this increase may raise costs for employers, the annual employment allowance will increase from £5,000 to £10,500, making it available to a wider range of employers (Gov UK, 2024).
  2. Investment in Infrastructure: The government has committed to significant infrastructure projects, which aim to stimulate economic growth and create jobs. This could be beneficial for businesses by providing better facilities and services (Financial Times, 2024) (Gov UK, 2024).
  3. Tax Compliance Initiatives: New measures will be introduced to tackle tax non-compliance in the umbrella company market, which is expected to enhance the fairness of the tax system and reduce the burden on compliant businesses (Financial Times, 2024).

Conclusion

The 2024 Autumn Budget is characterised by measures intended to provide immediate financial relief to individuals while also addressing longer-term economic stability for businesses. With the rise in the living wage and adjustments to support schemes, the budget aims to alleviate some pressures caused by inflation and the cost of living crisis. However, businesses will face increased NIC costs, which could affect their operational expenses. Overall, the budget reflects a balanced approach to tackle current challenges while investing in future growth.

Source List:

Financial Times (2024) Autumn budget 2024, KPMG. Available at: https://kpmg.com/uk/en/home/budget.html (Accessed: 31 October 2024).

Gov, UK (2024) Autumn Budget 2024 – GOV.UK. Available at: https://www.gov.uk/government/topical-events/autumn-budget-2024 (Accessed: 31 October 2024).