The October 2024 UK Budget introduced several key measures affecting businesses across multiple sectors. Chancellor Rachel Reeve’s announcements focused on economic stability, with both immediate and long-term implications for the UK’s corporate landscape.

One major shift was the increase in National Insurance contributions (NIC), which will rise by 1.2% to 15% for employers beginning April 2025. This change, paired with an increase of 6.7% in the National Minimum Wage to £12.21 per hour, may create a financial strain on small and medium enterprises (SMEs) already facing post-pandemic recovery challenges. The minimum wage for workers aged 18 to 20 will increase from £8.60 to £10 an hour, a rise of more than 16% and the largest increase on record.

To offset this burden, the Employment Allowance has been increased to £10,500 from £5000, potentially easing some of the NIC load for eligible small businesses. However, with rising labour costs, SMEs may still face tighter budgets for development and talent investment​.

The hospitality and care sectors, in particular, may feel the pinch, as they often rely more heavily on lower-paid employees and may not benefit from the increased employment allowance.

Juliet Capelastegui, Managing Director at Teamwork Selection commented, “With this news adding pressure onto businesses, flexible workforces will be even more important to help spread employment costs over the year . That’s where temporary workers come in, perhaps during peak periods or for special projects. If you are nervous about making a commitment to a permanent salary and need flexibility with your workforce, we can help”

Here at Teamwork Selection, we understand the pressure these rising rates may cause your business and we are willing to work with you to continue to support your workforce and organisation as a whole. We have over 30 years of experience in recruiting for businesses across Gloucestershire.

Please get in touch if you would like to talk.