The Autumn Statement 2024 has proved to be significant for several reasons.
It was the first budget delivered by a female Chancellor, the first delivered by the Labour Party in 14 years, and the first to highlight tax avoidance in the umbrella sector.
On the back of a manifesto promising growth and investment in the UK economy and a Plan to Make Work Pay that would improve working rights and conditions for the UK's workforce, the UK's temporary labour sector could be forgiven for thinking that UK recruitment is in line for a boom if all goes to plan.
So, what did the Chancellor's budget include to back up such hopes?
Tackling Tax Avoidance is Clearly on the Agenda
While tax avoidance has been a problem for the umbrella sector for some time, the industry has been frustrated that the government has taken little real action to address it.
Following the budget announcement, it looks like it could change quickly.
In her address, Reeves said the government intended to “clamp down on umbrella companies that exploit workers” and “crackdown on promoters of tax avoidance schemes.” She outlined the government's plans to bolster its compliance team and capability and modernise HMRC systems to help eradicate tax avoidance and non-compliance within the sector.
All positive news for compliant umbrella providers, contractors and agencies.
What Does the Budget Mean for Contractors and Agencies?
A prominent headline was the announcement of an increase in Employer National Insurance Contributions planned for April 2025. The Chancellor confirmed that Employer NICs will increase from the current rate of 13.8% to 15.00%. Increased Capital Gains tax rates compounded this increase in employment costs for businesses.
The news has had a mixed reception, with some arguing that it may stifle business recruitment plans. In contrast, others said businesses could engage contractors and temporary workers to avoid long-term employment costs and commitments.
Chancellor Reeves did, however, confirm an increase in the employment allowance for small businesses, making it more affordable and attractive for them to employ staff.
With increases to the National Minimum Wage and National Living Wage already announced, the Chancellor's final reassuring comment for individuals was that she was honouring her party's promise of no raises in income tax rates, employee NICs, or VAT.
Time to Let the Budget Dust Settle
While tax hikes usually make the headlines following a budget, it's wise to let the dust settle before taking any hasty actions.
At Champion, we'll digest every element of the Autumn Statement to ensure we can support and help our contractors and agency partners navigate any obstacles.
If you have any immediate questions about the Autumn Statement, contact the Champion Contractors team at 0161 703 2549 or email info@championcontractors.co.uk.
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