Last week, the UK’s new Labour government announced their first budget. The first ever female Chancellor of the Exchequer, Rachel Reeves, delivered an hour-long speech to the House of Commons announcing her financial plans for the year ahead. Employers in all sectors paid particular attention to the new taxes announced in the budget. There are a number of new changes to come, and at OneAdvanced, we’re here to help you prepare.
What’s new in the budget?
The big story from the budget was changes to tax paid by employers. With Reeves planning to raise £40bn in taxes in the year ahead, over half of that will be funded by changes to employer National Insurance (NI) contributions. These reforms have come in two main parts.
The chancellor announced a 1.2% rise in employer NI contributions, bringing it to a total of 15% overall. This change will be implemented from April 2025, affecting all employers for the coming financial year. While Reeves announced that employee NI contributions would stay the same, it’s vital to make sure your system is set up to be ready for the changes to come.
Meanwhile, there has been a change to the secondary threshold – the level of pay at which employers begin to pay NI contributions. The threshold has been reduced by nearly half, going from £9,100 to £5,000, which will bring far more payroll into the taxable range. It’s going to be important that your payroll system is up to date with all the right records ready to pay the necessary contributions.
There was also some relieving news for employers. The Employment Allowance – a rebate on Class 1 NI contributions – will rise from £5,000 to £10,500. There will also be an end to the upper threshold of £100,000, meaning that more employers will benefit from the rebate. It’s vital to make the most of the allowance to protect your budget, so making sure that your system is set up to send the right info with your Employment Payment Summary is key.
How can OneAdvanced help?
As an HMRC-approved supplier of payroll software, OneAdvanced provides solutions that can help you to automate complexity, foster trust, and, most importantly, remain compliant. Our software can ensure that your payroll team can stay on top of the changes to come, making it easier to make sure you’re getting everything right. With regular automatic updates and strong compliance, our customers don’t have to worry about keeping up with legislation.
Our team are already working to prepare for the changes to come, so that we’re ready for the new legislation at the start of next financial year. Automatic updates will be rolled out in quiet hours to our cloud-based customers, so they won’t have to worry about getting up to date. On the other hand, our on-premises customers will be supported to carry out the updates themselves.
If you’re relying on a legacy payroll solution, this could be the perfect time to upgrade with modern capabilities. Our HMRC-approved Payroll solution ensures compliance with streamlined RTI, automatic pension enrolment and data security. You can learn more about Payroll, as well as our full suite of People Management solutions, right here.