As the UK prepares for its first Labour government budget in 14 years, all eyes are on the key reforms and policies expected to shape the economic landscape. From business rate reform to pension changes and potential adjustments to National Insurance, this budget is poised to bring significant changes for businesses and the employment market. The focus is on balancing public finances and addressing key economic concerns, including the cost-of-living crisis and boosting productivity, while maintaining Labour’s promise not to raise income tax or National Insurance rates for most workers.

Here's what has been announced, what to expect, and how these shifts could impact hiring strategies across the UK.

 

What’s Already Been Announced:

  • Business Rate Reform: Labour has committed to reviewing the outdated business rate system, a move aimed at boosting businesses, particularly small and medium enterprises (SMEs). However, any comprehensive reform is expected to take time.
  • Pensions: There have been speculations about reforms to the tax-free lump sum from pensions and a possible flat rate for pension tax relief. Labour has hinted at maintaining fairness while exploring these reforms, especially to prevent impacts on those with larger pension pots or high earners.
  • Capital Gains Tax (CGT): There is ongoing discussion about changes to CGT, particularly the "double death tax" where assets could be taxed twice—once through CGT and again via inheritance tax—when passed on after death. Such reforms aim to raise additional revenue for public services.

 

Expected Announcements:

  • Banking Surcharge: While Labour previously opposed cuts to the banking surcharge, no immediate changes to taxation for banks are expected, in line with maintaining business confidence.
  • National Insurance Adjustments: There is some speculation that National Insurance contributions from employers could be targeted, which might increase costs for businesses. This could lead to greater investment in capital assets, aligning with Labour’s focus on productivity growth.

 

Impact on the Employment Market:

Labour’s policies are expected to focus on encouraging higher wages and productivity, but the potential changes to employer National Insurance contributions and pension reforms could increase costs for businesses. This, in turn, might affect hiring strategies, as companies may reconsider benefits packages or reduce recruitment to manage costs.

 

How Maxwell Bond Can Help: 

With the evolving landscape, it's critical for businesses to stay ahead in recruitment. Maxwell Bond is positioned to help UK companies navigate these shifts by offering tailored hiring solutions and strategic workforce planning. Our deep understanding of industry dynamics and upcoming changes ensures that we can help businesses attract top talent, particularly in high-demand sectors like tech and sustainability. As businesses look to 2025, working with Maxwell Bond means being prepared for both opportunities and challenges ahead.

Contact us today to discuss how we can support your talent acquisition strategy in this changing environment.