QPS overview of the autumn Budget 2024: what recruitment agencies need to know
The Autumn Budget 2024, released by the Labour government, introduces sweeping changes that heavily impact recruitment agencies, umbrella companies, and contingent workers.
Key measures include increased employer National Insurance Contributions (NICs), tightened compliance regulations, and bolstered enforcement resources, directly influencing both the financial and operational frameworks of agencies. Here’s a detailed look at the budget’s implications and how QPS’s advanced technology solutions are designed to mitigate compliance risks, offering strategic support in this evolving regulatory landscape.
Tax changes impacting recruitment agencies & umbrella companies
Employer national
insurance contributions (NICs):
From April 2025, employer NICs will rise by 1.2 percentage points to 15%, alongside a reduction in the threshold from £9,100 to £5,000.
This change will substantially impact recruitment agencies’ payroll costs, especially for those with larger payrolls. Small businesses, however, can benefit from the expanded Employment Allowance of £10,500, offering potential savings of up to £3,500 annually and partially offsetting the increase in NICs for smaller operations.
National living wage increase:
From April 2025, employer NICs will rise by 1.2 percentage points to 15%, alongside a reduction in the threshold from £9,100 to £5,000.
This change will substantially impact recruitment agencies’ payroll costs, especially for those with larger payrolls. Small businesses, however, can benefit from the expanded Employment Allowance of £10,500, offering potential savings of up to £3,500 annually and partially offsetting the increase in NICs for smaller operations.
Capital gains tax (CGT):
The budget includes substantial increases in CGT, with the lower rate rising from 10% to 18% and the higher rate moving from 20% to 24%. For business asset disposals, relief rates will also increase gradually to 14% starting in April 2025, impacting agencies and umbrella companies managing assets on behalf of contractors. This shift necessitates proactive financial planning for agencies and their clients who may be affected by these changes.
Want even more insights?
At QPS, we are dedicated to supporting businesses with expert payroll and financial services, and offering insightful analysis and practical advice on employment and tax legislation. Our mission is to help businesses navigate complex regulatory landscapes with confidence. This is why we’ve taken the time to go through the 2024 Autumn budget and highlight the bits that are most important to recruitment agencies, giving you insights and expert analysis on the implications for you, your candidates and your business.
