What a tech recruiter like me makes of Spring Budget 2024

We’re tech recruiters not accountants but the sheer volume of IT contractors we place gives us a good grasp on the most taxing HMRC issues for candidates, so we read yesterday’s Spring Budget 2024 with interest, writes Adrian Smith, senior operations director at Randstad Digital.

Another 2p cut to NICs

Before chancellor Jeremy Hunt got to his feet yesterday, sole trader self-employed workers were paying 10% on earnings between £12,570 and £50,270 in Class 1 national insurance contributions. This was reduced from 12% of earnings at Autumn Statement 2023.  

Once Mr Hunt had sat down, this national insurance rate had been cut by a further two percentage points from 10% to 8%.

Not to be sniffed at

In one sense, this 8% rate from April 6th 2024 shouldn’t be sniffed at because it’s worth almost £250 to someone on a yearly salary of £25,000, with a maximum saving of £754. 

In short, it’s better than nothing.

On the other hand, I don’t think this ‘tax cut’ was as big a deal as people are making out.  And there’s a few reasons why.

First, if the current polls are to be believed, Labour is likely to win the next general election which has been confirmed for this year. 

Will your (potentially) lower National Insurance bill get ripped up by Labour?

So this 2pence NICs cut (or 4pence in total once combined with the 2pence cut introduced on Jan 6th 2024) may be only valid for between six to nine months, before it’s torn up by the next chancellor.

That said, underlining the potential uncertainty with your HMRC liabilities, Labour leader Sir Keir Starmer has (currently) said he’ll keep the National Insurance cuts exactly as they are!

As well as a thumbs-up from sole traders, that pledge might win Sir Kier the backing of the other main beneficiaries of the NICs cut in the temporary tech workspace – umbrella contractor employees.

Fiscal drag, what a drag!

The other big issue we hear IT workers (regardless of status) understandably grumble about, is “fiscal drag.” 

Many workers are still being dragged into paying income tax, or paying it at the higher rate, due to the freeze on income tax thresholds, despite rising pay or rates. 

Keep in mind when you’re next totting up your take-home pay for a tech assignment, the threshold at which you start paying National Insurance is £12,570 -- but it’s been frozen at that level until 2028!

And it wasn’t unfrozen or even addressed yesterday by the chancellor.

No wiggle room

My personal take as an IT recruiter is; I don't think the government has the fiscal headroom to have made Spring Budget 2024 any bigger a deal than it was. Even if they wanted to.

The scope for any sizable tax, spending, borrowing, or regulatory changes is just too limited. Debt’s too high. Growth is too anaemic.  

Given that rather gloomy set of metrics, I would have liked to have seen a different focus from chancellor Hunt yesterday. 

Chancellor, work visas need reform on costs and duration

As a big, open, services-led economy, the UK needs to make the best use of talent more than ever before. 

That's why our recruitment business wanted to see the chancellor reduce the costs of sponsoring work visas — while extending these visas from two to five years. 

As I said at the top, we’re recruiters not accountants, but according to our calculations, such a dual move on visas would allow UK employers to see a return on their investment. 

A missed opportunity on tech skills…

We were hoping the Spring Budget 2024 would announce a rethink on the higher salary threshold for the Skilled Worker Visa (set to increase to £38,700), too. Unfortunately, the Skilled Worker Visa is currently robbing the UK of key people during a massive talent shortage.

Successful modern economies are international and the UK should be introducing immigration policies that support the technology sector. So numbers and take-home particulars aside, for the technology and digital hiring space, yesterday was a missed opportunity to ease the tech sector’s stubborn skills shortage.