What the latest UK budget breakdown means for employee benefits

Britain’s chancellor, Rachel Reeves, has expressed a mandate for a 'decade of national renewal'. Reeves has pledged to put more pounds in people’s pockets, improve living standards, and restore economic stability after 14 years of Conservative government.

The only way to drive this economic growth, Reeves insists, is to "invest, invest, invest."

Here are the key points from the new budget:

• Taxes will rise by £40bn
• Employers’ National Insurance (NI) contributions will rise from 13.8% to 15% from April 2025
• The Government will reduce a secondary threshold from £9,100 to £5,000 when NI contributions are due
• The Government will invest £975m in aerospace, £2bn in automotive to support electric vehicles, and £500m in life sciences over 5 years
• In 2025-26, they will invest £1.6b in local road maintenance

What do these changes mean for businesses?

Make salaries go even further with NI contribution changes

Increases in employer NI contributions might not only have impacts on your business, but also your staff. That said, when one door closes, another one opens. This allows businesses to create strategies to ease the burden and strain on employees. 

By introducing employee benefits and salary sacrifice schemes, companies could help offset some of the additional costs while providing attractive and meaningful benefits to their people.

Over the last year, Perkbox has helped employees save millions of pounds — providing real support during the cost of living crisis. Katherine, one of our Perkbox users, mentioned that every little bit counts and says she’s saved on everyday purchases and even her gym membership: 

"I have been using my gym for 7 months and checked Perkbox and realised my gym is on here. I'm over the moon as I now get my membership £10 a month cheaper! Proper happy bunny."

To maximise savings on NI contributions, employers can also choose to promote initiatives like cycle to work schemes and car leasing benefits to:

1. Help their staff commute in a more financially manageable way
2. Potentially reduce NI contributions by lowering their taxable salary

Encouraging participation in these schemes means businesses may be able to retain more funds, which they might decide to reinvest back into the business — or even pass on as incentives to their teams.

Big investments in electric vehicles

To help drive the transition to electric vehicles (EVs), the budget has maintained EV incentives and extended allowances for another year. 

This is good news for businesses offering car leasing schemes as they can choose to continue promoting eco-friendly travel while potentially reducing their taxable benefits, supporting both environmental goals and employee wellbeing.

Having a smoother drive to work

The Government has committed to a nearly 50% increase in funding for local road maintenance from 2024/25. The aim is to repair one million potholes across England each year and improve safety for all road users.

This could add value to cycle to work and car leasing benefits, as employees may be more likely to consider these travel options knowing they can commute more securely.

Highlighting these benefits now could help employers support their teams and help demonstrate their commitment to safety and sustainability.

A big boost for employee benefits

The new budget presents a unique opportunity for employee benefits platforms and salary sacrifice schemes, especially as employees struggle with rising living costs and the financial stress leading up to Christmas. 

By tapping into the right benefits, employers can help make their people’s paychecks go further through perks and lifestyle discounts, set sustainability standards, and achieve organisational savings that drive success.

New year, new benefits

With 2025 approaching, it’s the perfect time to reassess your employee benefits strategy. We're here to help you implement cost effective and meaningful solutions that really resonate with your team, so be sure to get in touch today.