Understandably, yard owners may be concerned about the announcement of an increase in employer’s National Insurance contributions and rises in National Minimum Wage rates, it is a worrying time. It is therefore important to understand how the changes will affect your business in order to prepare for what is ahead.
The Budget announced that employers will start paying Employer’s National Insurance from a threshold of earnings above £5,000 instead of £9,100. The percentage which an employer contributes will also rise from 13.8% to 15%.
Although the increases above may seem like they will have a big impact on your wage bill, as a small employer, you can benefit from claiming the Employment Allowance which was previously £5,000 but has increased to £10,500. The Employment Allowance is allocated to your employer’s national insurance contributions through your HMRC liabilities. You can claim it if your Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.
In addition to the increase in employers NI contributions, the National Minimum Wage (NMW) is set to increase again in April 2025. The new rates will be:
- National Living Wage (NLW): £12.21 per hour for those aged 21 and over
- 18–20 year olds: £10 per hour
- 16–17 year olds and apprentices: £7.55 per hour
These are significant increases on 2024 rate and EEA members can access our online budget impact calculator to work out the how they will be affected.
What can yard owners do to keep their wage bill manageable?
You could consider whether you can reduce your staff’s working hours. Are there jobs which you can take on yourself so that you don’t have to pay someone else to do them? Or are there some tasks that can be completed less frequently?
If you do decide to reduce your staff’s hours, always discuss this with them first. Your decision will have financial implications for them as well as you. Any amendments to their contract must be agreed by them in order to avoid the risk of legal claims, for breach of contract or constructive dismissal.
It may just be a case of ensuring that no overtime is kept to a minimum and that staff stick to their contracted hours. However, you must still ensure that they are paid at least the NMW or receive time off in lieu (TOIL) for every hour they have worked. If you offer TOIL, this must be accurately recorded and should be taken within the same pay period.
There is a lot to consider when it comes to employing staff, so, to access all of the support you need, join the Equestrian Employers Association (EEA). An organisation that was created to support employers and promote good employment practices within our industry.