With Talk Money Week upon us, it’s the perfect time to reflect on the impact of the budget 2024 and consider what it means for us financially. Talk Money Week, run by the Money and Pensions Service, aims to encourage open conversations about money to help people make better financial decisions. It’s a week dedicated to tackling financial well-being and empowering people with the information they need to make sound choices. And this budget, arriving just before Halloween, has certainly sparked conversations on the future of our finances, for individuals and employers alike.
Labour’s Budget 2024
Crikey, it’s been a while since we last had a Labour government, and they certainly arrived with a bang in the budget. Whether it was the pop of champagne corks or the crack of a starting gun as employers prepare for possible headcount cuts remains to be seen. But in this Halloween eve budget, packed with both scares and frights, there are some things to root for, too. So, what are the main takeaways from this so-called ‘budget for growth‘?
Reflecting on the Nation’s Financial Health
As I write this from a train, exchanging WhatsApps with a friend who’s been waiting two years for an ACL operation, the country is clearly on its knees. Even before the vast expense of COVID, services were suffering, whether from underinvestment or waste, you decide. Likely, it’s a mix of both. But instead of directly hitting the ‘working person,’ the budget took a more indirect route, with unprecedented increases for employers: a major hike in the minimum wage and higher National Insurance contributions. However, this will impact the ‘working person’ too; jobs may go, prices will rise, and pay rises may be suppressed, particularly in the private sector. So, what does this mean for our customers?
Minimum Wage Rise: Staying Prudent Amid Changes
A minimum wage hike was expected, regardless of which party was in charge, so our qualification salary of £30k still seems prudent. We’re also introducing an option for employees to make ‘net deductions’ if allowed, to offer more choice (stay tuned for updates on this). It’s frustrating that the government still does not allow people to reduce their salary to the personal allowance threshold instead of the minimum wage, but we will continue lobbying.
National Insurance Increases: A Complex Issue for Employers
The tricky issue is the increased National Insurance for employers. We’ll contact each of our customers to discuss how you’d like to handle this for both current and future contracts. Salary sacrifice schemes may become even more attractive, both for cars and pensions, as they help offset some of these cost increases. It’s only fair to pass some savings back, but how much? That’s something to discuss with your account manager.
Employers Introducing the Scheme
Employees Going Green
Fuel Duty Freeze and EVs: Lower Running Costs but Limited Infrastructure
The freeze on fuel duty and BIK tax until 2028 means electric vehicles (EVs) continue to massively undercut petrol and diesel in running costs if you can charge at home. However, the cost gap isn’t widening, and there’s still no solid plan for street charging. On a positive note, it’s great to see more investment in green tech, like gigafactories. We’ve been advocating for a ‘green’ industrial revolution, and while this budget doesn’t place the UK ahead of other countries, it should keep us in step.
Impact on Salary Sacrifice: Smart Choices for Employers and Employees
Overall, the budget has little impact on employees who currently have, or are considering, salary sacrifice cars; they remain a smart choice with no significant changes. For employers, however, these cars are now an even more valuable part of the benefits portfolio, given the rise in employers’ NI and the likely pressure on employee salaries.
A Sequel Next Year? Uncertain but Important to Watch
As for a potential sequel? Make no mistake, this isn’t the end of the story. Whether next year’s follow-up will have a happy ending or a bloodbath remains to be seen.
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Fleet Evolution offers innovative salary sacrifice schemes, helping employers and employees save on costs while promoting eco-friendly electric cars. Enjoy easy setup, free maintenance, and swift activation for any company size.