The Labour government unveiled its latest Budget announcement, with significant changes planned for the economy.

From potential tax implications to changes in wage rates, we’ve provided some candid insights that’ll help you understand these incoming developments.

Important takeaways for employers and businesses

Below are the key elements of the Budget that we believe are most relevant to you as an employer.

• The national minimum wage will rise by 6.7%: From 1 April 2025, the national minimum wage paid to workers aged 21 and over will rise by 6.7%, from £11.44 an hour to £12.21 an hour. The rate will also rise for those aged between 18 and 21 by 16.3%.
  
  
• National Insurance to rise to 15% for employers: Employers’ National Insurance contributions will rise from 13.8% to 15%, with the threshold at which businesses start paying National Insurance on a workers’ earnings being lowered from £9,100 to £5,000.
  
  The chancellor also said she would extend the Employers Allowance – the amount employers can claim back from their National Insurance bill – from £5,000 to £10,500.
  
  
• Current 75% discount to business rates to be lowered to 40%: The current 75% discount to business rates will be replaced by a discount of 40% up to a maximum of £110,000 from April 2025. Many businesses will see their business rates nearly double.
  
  
• Fuel duty to remain frozen: From spring 2025, fuel duty will remain frozen at 52.95p a litre.

Announcements your staff may need to know about

The Budget announcement will also have a sizeable impact on your employee’s lives and expenses.

• The State Pension will increase by 4.1%: The triple lock raises the State Pension annually in line with the highest of increases in prices, average earnings, or 2.5%. Starting in April 2025, the state pension will see a boost of 4.1%. Those on the full new State Pension will be looking at an increase to £230.30 a week, which adds up to £11,975 a year. For those who receive the old State Pension, it will rise to £176.45 per week or £9,175 annually.
  
  
• Inheritance Tax to include inherited pensions: The inheritance tax threshold of £325,000will be frozen for a further two years until 2030. This means the first £325,000 of any estate can be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants, and £1m when a tax-free allowance is passed to a surviving spouse or civil partner.
  
  The Government also proposes bringing unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6 April 2027.
  
  
• Carer’s Allowance earnings limit to increase: The amount carers can earn and still receive the Carer’s Allowance is set to increase, from £151 to £196 per week, equivalent to 16 hours work at the National Living Wage.
  
  
• Income Tax Threshold freeze: There will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions of the previous government. Scotland and Welsh governments may wish to amend their own thresholds when they hold their own Budget.
  
  A tax threshold freeze can mean that, as employees move into a higher income band due to pay increases, they may also pay a higher tax rate without changes to the tax brackets. From 2028/29, personal tax thresholds may increase in line with inflation.