Chancellor Rachel Reeves delivered her first Autumn Budget on 30 October 2024, unveiling a £40 billion fiscal package aimed at rebalancing the public finances and funding new infrastructure, green energy, and skills initiatives.

While the speech signalled investment and growth, it also introduced a series of steep tax changes that will affect the cost base of many construction firms and contractors alike.

Headline measures include:

• A 1.2 percentage point increase in employers' National Insurance Contributions (NIC), from 13.8% to 15%
• The abolition of the separate Upper Secondary Threshold for under-21s and apprentices
• A change in Capital Gains Tax (CGT), with higher rates for gains on business assets
• Frozen income tax thresholds through 2028, increasing effective taxation on wages

While the government positioned these moves as part of a fairer tax system, they will significantly increase labour costs — particularly for employers operating in sectors with tight margins and heavy reliance on subcontractors.

Employers' NIC: What’s Changing?

From April 2025, the employer’s NIC rate will rise from 13.8% to 15% — the first increase of its kind in nearly two decades. The annual threshold has fallen to £5,000 which means this significant increase will apply at a much lower threshold than currently applies.

CGT Reform: Less Attractive Exit for Business Owners

The Budget also confirmed that the top rate of Capital Gains Tax for disposals of business assets will rise from 20% to 28%, aligning it with personal investment CGT.

Entrepreneurs’ Relief (Business Asset Disposal Relief) remains, but further restrictions on qualification may follow in Spring 2025.

This will particularly impact:

• Company owners planning to sell or wind down
• Contractors operating through personal service companies (PSCs)
• Family businesses looking at succession planning

Why This Matters to Construction Clients

The changes announced in this Budget introduce immediate and medium-term cost pressures on construction businesses, labour suppliers, and independent contractors.

Key risks include:

• Higher on-costs for employers, eroding margins on fixed-price contracts
• Increased wage demands from workers seeing less take-home pay due to fiscal drag
• Reduced incentives for contractors to remain incorporated, potentially shrinking the flexible workforce
• Exit planning complexity for business owners facing CGT hikes

Recommended actions:

• Review existing project bids and margins to account for higher NIC in FY2025–26
• Communicate with umbrella suppliers and subcontractors about rate increases
• Consider early tax planning for any ownership transitions or contractor exits

For many in the construction sector, the combined effect of these changes could be to shift more operatives back toward PAYE structures — voluntarily or otherwise — reinforcing the need for compliant, cost-efficient workforce engagement models.

Clients of Ardent Tide benefit from a fully optimised contracting model and strategic workforce compliance advice — helping you navigate tax changes without disruption to project delivery or profitability.