The Chancellor’s announcements will put an extra burden on hardworking families with a freeze in the income tax thresholds, which will see more people pay more tax in real terms and see more people fall into paying higher rates of tax as a result of fiscal drag.
Businesses and business owners face increased employment costs as a result of increased National Minimum Wage (NMW) and more National Insurance (NI) as a result of restrictions on salary sacrifice arrangements, resulting in increased costs for businesses.
There is also an increased tax burden on those who have worked hard, been prudent, and put money aside for their future, as a result of increased levels of tax on the interest from savings and on dividends.
Most people were expecting it to be worse than it actually was. The markets haven’t reacted badly to it, but haven’t reacted positively either.
This Budget is likely to hit business confidence.
An increase to the National Minimum Wage puts everyone’s wages up, and while this is welcome news for individuals, the NMW increase, on top of the 2024 Autumn Budget changes, has put a huge burden on businesses to employ people.
It will make employers think twice about recruitment and may have an impact on businesses taking on young people.
The changes to salary sacrifice from 2029 will not only impact employees who will pay more NI, but businesses will also pay more NI.
When this comes into play, businesses will face further increased employment costs and it might influence their recruitment strategies. All of this comes ahead of the Employment Rights Bill, which is already worrying employers.
If the Chancellor wanted to improve business confidence, I don’t think that’s what this Budget has done.
We understand the challenges this Budget brings and will continue to support our clients in navigating them with confidence.
