Autumn Budget 2025: Confirmation of National Minimum Wage Increase

Rachel Reeves has unveiled the Autumn Budget today (26/11/2025) which looks to raise taxes overall by 26 billion pounds by 2029-30. Some key takeaways for employers to be aware of and implement, include an increase in the National Minimum Wage (including the National Living Wage), a freeze in National Insurance contributions for employers from 2028/29, as well as a reduction in the writing down allowance in Corporation Tax to £1.5bn.

Also in the budget, it was announced that salary sacrificed pension contributions will be taxed.

Economic growth forecasts have been downgraded, with the UK economy expected to grow by 1.4% as opposed to the previously forecast 1.9% for 2026.

The Autumn Budget key takeaways:

• Both personal and employer National Insurance contribution thresholds will be frozen over a 3-year period, starting 2028/29.
• Salary sacrificed pensions will feature a £2000 cap from 2029, amounts put into these schemes above this cap will be taxed.
• Taxes on property, savings and dividends will be increased by 2%.
• Corporation tax will have a reduction in the writing down allowance main rate.
• Electric vehicles will have a milage based charge introduced from 2028. This includes battery, electric and plug in hybrid vehicles.
• Gambling taxation to increase by 1.1 billion.
• Capital gains will undergo a tax relief reduction of 900m on disposals to employee ownership trusts.
• A ‘Mansion tax’ will see a council tax surcharge on properties worth over 2m
• Tax administration, compliance and debt collection measures to raise £2.3bn
• Fuel duty will have a phased increase from 2026, prior to a 5-month freeze.
• National Minimum Wage and National Living Wage set to increase from April 2026.
• Apprenticeship rate set to increase to £8 from April 2026.

What does this mean for UK employers?

Employers should be prepared to review their documentation and contracts; they should also seek to ensure that they are compliant with the new National Minimum Wage and Living Wages.

NLW will increase to £12.71 an hour for over 21-year-olds, whilst NMW will increase for 18–20-year-olds to £10.85 and hour. Elsewhere 16–17-year-olds will receive £8 an hour. Those employers who hire and employ apprentices should review their contracts to ensure that the new rate of pay (£8) is considered.

The chancellor also announced the scrapping of co-investment payments that SMEs will have to pay for apprentices under the age of 25.

Businesses who provide company vehicles should take note of the upcoming changes to electric vehicle charges and review their contracts accordingly.

Not sure how the budget affects your business?

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