Champion Round-Up | By Ged Cosgrove, group managing partner
On 30th October, Labour’s new chancellor of the exchequer, Rachel Reeves, unveiled the party’s first Budget since 2010.
In her much-anticipated speech, Ms. Reeves outlined sweeping changes to the tax regime and public spending. Promising substantial investment to improve public services such as the NHS, the Budget also aimed to recoup £40bn through tax increases.
While the Chancellor had warned of “painful” tax hikes, she assured employees would be spared. However, businesses – particularly SMEs – are facing a significant sting.
Of particular concern is the rise in National Insurance Contributions for employers, which will increase by 1.2% to 15% from April 2025. Additionally, the NICs threshold will drop from £9,100 to £5,000, significantly increasing the financial burden for many SMEs.
Adding to employers’ concerns is the scheduled rise in the national minimum wage, also set for April 2025. The standard rate will increase to £12.21 per hour, with wages for 18-20-year-olds rising to £10 per hour and apprentices to £7.55 per hour.
To put this into perspective, an employee working 40 hours a week on the new minimum wage will cost their employer an additional £1,601 per year due to the wage increase, alongside an extra £1,031 in NICs under the new thresholds – a total of over £50 per week in added costs for just one employee.
For higher earners, the NICs increase alone will add £865 per year for an employee on a £30,000 salary and £1,106 per year for an employee earning £50,000.
Private care providers are among those hardest hit. While the sector welcomed an additional £600m in funding for adult and children’s social care, many care groups have expressed fears that rising staffing costs will negate these funds almost immediately.
Charities are also facing challenges. For example, one long-standing Champion client – a charity integral to its local community – will see its annual wage costs increase by £130k next year. This comes at a time when government grants to charities are being reduced, leaving many organisations struggling to balance their books.
It’s our hope that the government considers exemptions or relief for sectors like private care and charities to help alleviate these pressures.
What Businesses Can Do
As an accountancy group specialising in SMEs, Champion understands the unique challenges these businesses face. We pride ourselves on building strong, lasting relationships with our clients, tailoring our services to their needs, and supporting them through times of change.
To help clients navigate the upcoming changes, we’ve developed our proprietary Champion NIC calculator, which allows businesses to quickly calculate the impact of the new costs they’ll face next year.
To access our NIC calculator or discuss how these changes may affect your business, please contact your local Champion office.
We’re here to help you prepare, adapt, and thrive in the face of these challenges.
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