The 2024 Autumn Budget presented by Chancellor Rachel Reeves has significant implications for the UK economy, particularly in the realms of taxation and recruitment. This budget, the first for the Labour government in over a decade, aims to address the fiscal challenges inherited from previous administrations while setting a course for future growth. As a leading recruiter and talent solutions specialist in the UK and across the globe, we have looked at the budget and broken down the key highlights and impacts on the recruitment sector.
Tax increases and reforms
To balance a £40 billion fiscal gap, the government has implemented several tax increases, including raising capital gains tax (CGT) rates from 10% to 18% and from 20% to 24%, effective immediately. Additionally, inheritance tax thresholds will remain frozen until 2030, which could impact estate planning for many families. The Chancellor also announced an increase in employer national insurance contributions from 13.8% to 15%, alongside a reduction in the earnings threshold at which these contributions apply
Support for households
The budget includes measures aimed at easing the cost of living, such as a £500 million investment to build 5,000 new affordable homes and an extension of the Household Support Fund. This fund will provide local authorities with resources to assist vulnerable households with essential expenses like food and utilities.
National living wage increase
The national living wage will rise by 6.7% to £12.21 per hour starting in April 2025, benefiting over three million low-paid workers. This increase is part of a broader strategy to enhance living standards amid rising inflation and economic uncertainty.
Impact on the Recruitment industry
The recruitment sector has reacted positively to certain aspects of the budget, particularly regarding infrastructure investment and wage increases.
However, there are concerns about the implications of increased employer national insurance contributions on hiring practices:
Increased costs for employers: the hike in national insurance contributions is expected to raise costs for businesses, potentially leading to cautious hiring practices. Recruitment firms may face challenges as companies reassess their staffing needs in light of higher payroll expenses.
Opportunities in infrastructure: the commitment to substantial infrastructure investment is likely to create new job opportunities across various sectors. Recruitment agencies may see increased demand for skilled labour as projects roll out over the coming years.
Focus on skills development: the budget has underscored the need for enhanced skills training within the workforce. As industries evolve and adapt to new technologies, there is a pressing demand for skilled workers. Auxo is poised to play a crucial role in bridging this skills gap by connecting employers with qualified candidates.
Key takeaways
The 2024 Autumn Budget has a crucial impact on the UK economy and its recruitment industry. Although there are plans for infrastructure investment and wage increases aimed at supporting households, the implications of rising taxes and national insurance contributions may pose challenges for employers and recruiters alike.
As businesses navigate these changes, collaboration between government, industry leaders and talent solutions specialists like Auxo will be essential in fostering a resilient workforce capable of driving future growth. The effectiveness of these measures will ultimately depend on their implementation and the government's ability to sustain momentum in addressing both economic stability and workforce development needs.
Contact us now to find out how we can help you navigate these changes and achieve success now and in the future:
