In the Labour Party’s first Budget Statement for 14 years, Rachel Reeves – the first female Chancellor of the Exchequer – presented the Autumn Budget to parliament today (30 October).
With a focus on economic stability and investment, the Budget saw taxes rise by £40 billion and many measures were announced that affect employees and self-employed workers:
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National Minimum Wage will increase for workers of all ages.
The Budget states that the National Minimum Wage, known officially as the National Living Wage, will be increasing from April 2025. For those aged 21 or older, the National Living Wage will increase by 6.7% from £11.44 to £12.12 per hour. For someone working a 37.5-hour week, that equates to £23,873.60 a year, instead of the previous £22,368.06.
This follows the advice from independent government advisory body, Low Pay Commission, who, in September 2024, recommended the National Living Wage be increased to £12.10: a figure the chancellor decided to slightly exceed.
Those aged 18 to 20 will see a 16.3% increase to £10 an hour, while apprentices will experience the largest increase, with their hourly rate rising from £6.40 to £7.55. Apprentices’ annual wage will see an increase to £14,762, up from £12,513.
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National Insurance to increase for employers – with some help offered to small businesses.
A number of announcements were made about employers’ National Insurance contributions, including a 1.2% rise from April 2025: from 13.8% to 15%, which was higher than expected. The current £9,100 threshold at which businesses start paying National Insurance on each employee’s salary is set to be lowered to £5,000. With the measures creating £25 billion, the Chancellor described this as ‘a difficult choice’.
To help smaller businesses, Reeves announced that Employment Allowance will increase from £5,000 to £10,500. This government scheme helps eligible employers to reduce their annual National Insurance bill. “This will allow a small business to employ the equivalent of four full-time workers on the National Living Wage, without paying any National Insurance on their wages,” she noted. The measure will mean that 865,000 employers won’t pay any National Insurance next year, and over one million will pay the same or less as they did previously.
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Business rates relief lowered & system to be overhauled in 2026.
In the Autumn Budget Statement 2023, then Chancellor, Jeremy Hunt, announced the extension of the business rates relief scheme for retail, hospitality and leisure properties, providing these with a 75% relief, up to a £110,000 cap. This was set to expire on 31 March 2025, but Rachel Reeves has announced that the relief will fall to 40% for 2025/2026, following today’s Budget. She described the previous government as creating a ‘cliff edge’ next year when reliefs end. The cap remains at £110,000, and the small business tax multiplier will be frozen next year.
From 2026/2027, the government plans to introduce ‘two permanently lower tax rates for retail, hospitality and leisure properties’, revealed the Chancellor. “It is our intention that it is paid for by a higher multiplier for the most valuable properties,” she commented.
To see if your business is eligible for rates relief, contact your local council.
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National Insurance, Income Tax, Corporation Tax and VAT remain unchanged.
With the government ‘committed to not increase taxes on working people’, the Autumn 2024 Budget sees no change to workers’ National Insurance, Income Tax or VAT. However, Reeves has announced that she will not be extending the freeze on Income Tax and National Insurance thresholds. This means they will continue to rise in line with inflation again in 2028.
Reeves explained her decision, saying: “Having considered this issue closely, I have come to the conclusion that extending the threshold freeze would hurt working people and take more money out of their payslips. I am keeping every single promise on tax that I made in our manifesto.”
The Corporate Tax rate also sees no change and will continue to remain at its cap of 25% for the duration of the parliament.
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Fuel duty freeze to be extended.
Rachel Reeves has confirmed that fuel duty will remain frozen at its existing 5p per litre cut. She confirms: “I have decided to freeze fuel duty next year and I will maintain the existing 5p cut for another year too. There will be no higher taxes at the petrol pumps next year.”
Fuel duty refers to a tax levied on petrol, diesel, natural gas and other UK fuels, which has been frozen since 2011. Thus, if the Chancellor had decided to reverse the cut, petrol and diesel duty would have continued to rise in line with inflation rates at 7p per litre.
Caroline Larissey, chief executive – NHBF
Caroline Larissey, chief executive of the National Hair & Beauty Federation, comments on the Budget announcement:
“We asked the government for support for employers to counteract rising wages, so we’re pleased that there is a rise in the employment allowance, which will benefit some sector businesses, despite the rises to employers’ National Insurance contributions. However, with 16%+ rises in the youth wage rates, there was nothing on interim support for businesses training young people.
“The only ‘youth guarantee’ for our sector will be that small and micro employers won’t be able to afford to take on apprentices. This makes it even more vital that Skills England is responsive to the needs of our sector and the Growth & Skills levy channels major support to incentivise small and micro businesses training apprentices.
“We will engage constructively with the consultation around business rates reform and the decision to keep at least some support through a 40% retail business rates discount and freeze of the small business multiplier is welcome and important in the interim. The government was silent on VAT but we will continue to push for reform, which is the sector’s number one issue.
“While the employment allowance increase offers some breathing room, the dramatic rise in apprentice wages threatens to disrupt the traditional pathway into our sector. Without targeted intervention, we risk creating a skills gap that could take years to bridge. The government’s approach to retail business rates shows they’re listening, but more comprehensive support is needed to ensure the sustainability of apprenticeships in hair and beauty.”