On 30 October 2024, the Chancellor of the Exchequer (Rachel Reeves) delivered her first budget as part of the new Labour government. The budget contained measures to increase taxes on individuals and businesses amounting to over £40 billion to support investment in public services. The biggest tax raising measure, estimated to raise £25 billion, involves increasing the amount of National Insurance employer’s must pay.
From April 2025, the employer’s National Insurance rate will increase from 13.8% to 15.0%. At the same time, the employer’s National Insurance threshold will be reduced from £9,100 to £5,000. This means the cost to a business of employing an individual on a salary of £40,000 will increase by almost £1,000 per annum.
To help the smallest businesses manage the additional costs, the Chancellor also announced an increase of £5,500 to the Employment Allowance (from £5,000 to £10,500 per annum). This means a business with up to five employees and an average salary of £40,000 per employee will see the increase in National Insurance costs covered by the increase in the Employment Allowance.
Larger Accountancy Practices with more than five employees will see substantial increases in their employment costs. However, the changes also affect smaller Practices who are incorporated with a single director and have no employees. These businesses are ineligible for the Employment Allowance, and, if the director receives a salary of £12,570 per annum (the tax-free allowance and primary national insurance threshold) the amount of Employer’s National Insurance paid will increase from £479 per annum to £1,136 per annum.
While accountants have been working hard to help clients understand the impact of the budget on their finances, as businesses themselves, many accountants are assessing the impact of the increase in Employer’s National Insurance and are taking action to mitigate these additional costs.
How accountants are dealing with the increase in Employer’s National Insurance
To mitigate the increase in Employer’s National Insurance, accountants are looking carefully at their workforce plans and adjusting roles and responsibilities accordingly. Some roles can be combined or removed completely by investing in measures to increase productivity. Investment in automation, Artificial Intelligence and cloud accounting software can help reduce overheads and improve the effectiveness of service delivery.
This is where outsourcing comes into play. By leveraging the capabilities of outsourcing, accountants can streamline and augment their services, reduce costs, and make operations more efficient and competitive.
Outsourcing can help mitigate any additional costs of employment
UK accountants looking to manage costs effectively find outsourcing work offers a ready-made solution. By outsourcing work, accountants can access a global pool of talented professionals, increase productivity and efficiency, and improve customer service.
Offshore suppliers can help UK accountants fill roles across all types of accounting work, including bookkeeping, year-end accounts preparation, company tax, payroll, VAT accounting, personal tax, and secretarial services. Systems and processes to complete work are highly efficient with rapid turnaround times. The best outsource supplier can prepare records in real-time using cloud accounting software and transfer data using secure servers.
UK accountants have found the main benefits of outsourcing work to be:
- reduced costs and overheads
- access to a stable team of professionals
- increased quality and consistency of work
- better turnaround times
- improved client experience.
Outsourcing work underpins delivery of business objectives, reduces costs and supports growth. Initor Global’s outsourced tax, accounting and payroll services are suitable for all types of Accounting Practices – from sole practitioners to LLPs.
Try Initor Global outsourcing service for free
At Initor Global, we have been providing offshore services to UK accountants since 2006. Our outsourced tax, accounting and payroll services are suitable for all client engagements – from sole traders and micro businesses to SMEs and large companies.
We offer a free trial of up to 10 hours of accountant and promise to turn your trial work around within 72 hours.
If you are an accountant looking to outsource services, increase margins and help your client’s thrive, you can book a video call with one of Initor Global’s expert advisors using this link or send an email to hello@initor-global.co.uk.
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