30.10.2024

Rachel Reeves unveiled her first budget since becoming Chancellor today, outlining the Government’s plans for public spending and taxation.

In the first budget since the spring, the Chancellor announced various measures around Employers’ National Insurance contributions (NICs), Capital Gains Tax, and Corporation Tax.

She also officially confirmed changes to the National Minimum Wage and other public spending commitments that were revealed in recent days. Read a quick breakdown of the announcements relevant to the sector and our reaction below.

  • Don’t forget to sign up here for our live webinar taking place at 12pm tomorrow, Thursday, October 31st, where Make UK’s experts will analyse the Budget and its impact on manufacturing.

Employers’ National Insurance contributions (NICs)

One of the key announcements relevant to businesses today was on NICs. The current rate at which employers pay NICs on workers’ earnings will rise from 13.8% to 15%, while the threshold at which payments start will fall to £5,000 from £9,100.

Manufacturers and businesses more widely have argued that this could make it more difficult to hire new staff and create jobs, while our initial calculations suggest this could be costly to the manufacturing sector.

Tax and reliefs – Corporation Tax, Fuel Duty, Capital Gains, Full Expensing, R&D reliefs

Corporation Tax will be capped at 25% for the next five years, while the small business tax multiplier is to be frozen. Furthermore, the 5p cut to fuel duty, introduced following the Russian invasion of Ukraine in March 2022, will remain for another year, alongside a freeze in the duty.

Capital Gains Tax, charged on profit made from the sale of assets, will see increases, with the lower rate set to rise from 10% to 18%, and the higher rate from 20% to 24%. While the Chancellor has also confirmed that Full Expensing of Capital Equipment will be maintained alongside existing R&D reliefs and company car tax incentives for electric vehicles.

National Minimum Wage

The National Living Wage, paid to those over 21 years of age, will rise to £12.21 an hour from April 2025, an increase of 6.7%.

The National Minimum Wage will also rise in the spring, from £8.60 an hour to £10 for those aged 18,19 and 20.

The separate apprentice rate, which applies to eligible people under 19 - or those over 19 in the first year of an apprenticeship, will also rise, from £6.40 to £7.55, an 18% increase.

Industrial Strategy and Made Smarter

The Government recently launched a green paper on its modern industrial strategy, setting out eight key growth-driving sectors. The budget confirms that existing funds, previously pledged towards the previous government’s Advanced Manufacturing Plan, will be put towards the industrial strategy.

Including £975 million in R&D funding for the aerospace sector over five years, and over £2 billion in R&D and Capital funding over 5 years to support the automotive sector, including for the zero emissions vehicle manufacturing sector and supply chain. 

And up to £520 million for a new Life Sciences Innovative Manufacturing Fund to drive growth and build resilience for future health emergencies. The planned Made Smarter roll-out to all nine English regions will also go ahead as planned.

Read our reaction to the budget below, including on the announcements regarding Employers' National Insurance contributions, the Corporate Tax roadmap and Made Smarter.