The Autumn Budget 2025, delivered on 26 November, sets the tone for the year ahead, and introduces several important updates that will directly affect payroll operations across UK businesses. This includes changes to wage rates, employment-related costs, pensions, and future tax policy.

At Qualitas, we have reviewed the Budget in detail to highlight what employers and accountancy firms need to know, why it matters, and how these changes may impact payroll management in 2026 and beyond.

1. National Minimum Wage & National Living Wage Increases (April 2026)

The government confirmed increases across all minimum wage bands for the upcoming tax year. These will take effect from April 2026.

From April 2026, rates will be:

• National Living Wage (21+): £12.71 per hour
  (Up from £12.21 — an increase of 50p per hour)

• Aged 18–20 Minimum Wage: £10.85 per hour
  (Up from £10.00 — an increase of 85p per hour)

• Aged 16–17 Minimum Wage: £8.00 per hour
  (Up from £7.55 — an increase of 45p per hour)

• Apprentice Rate: £8.00 per hour
  (Up from £7.55 — an increase of 45p per hour)

Why this matters:
For employers in retail, hospitality, manufacturing, logistics, care and other labour-intensive sectors, these increases will materially raise labour costs. Payroll forecasting and budget planning for 2026–27 should start now.

2. Employer National Insurance: Already Higher Since April 2025

Although not included in the Autumn budget announcement this month, major NIC changes took effect earlier this year. To 

From 6 April 2025:

• Employer NIC (Secondary Class 1) rate increased from 13.8% to 15%

• The Secondary Threshold (when employer NIC becomes payable) decreased from £9,100 to £5,000

• Class 1A/1B NIC on benefits also increased to 15%

• The Employment Allowance increased from £5,000 to £10,500

• The previous £100,000 eligibility cap was removed - meaning more employers can now claim

Why this matters:
Lower thresholds + higher NI rates = increased payroll costs per employee.
However, the increased Employment Allowance may offset these rises for some businesses.

3. Salary Sacrifice Pension Reform (Major Change Ahead in 2029)

The government confirmed significant future reform to salary-sacrifice pension schemes:

From April 2029:

• Only the first £2,000 of pension contributions made via salary sacrifice will receive NI relief

• Employer and employee NIC will apply to pension contributions above £2,000 annually

Why this matters:
This will impact higher earners, employees contributing large portions of salary, and employers offering enhanced pension packages. Accountancy firms should prepare to review client pension strategies well before 2029.

4. Freeze on Income Tax & NI Thresholds Continues Until April 2031

The Budget confirmed that frozen thresholds will remain until April 2031, after which they will increase in line with inflation.

Why this matters:
As wages increase, more employees will be pushed into higher tax brackets, raising payroll liabilities and increasing PAYE deductions.

5. Continued Tightening Around Benefits in Kind (BIK)

The government continues to progress towards mandatory payrolling of benefits, now delayed until April 2027, when all BIK reporting must move through payroll.

Why this matters:
Businesses still using P11Ds should prepare to transition early.
Accountancy firms should expect clients to need guidance.

6. Business & Employment Support Measures

The Budget also included broader economic measures relevant to payroll, including:

• Increased support for small businesses via updated Employment Allowance

• Continued focus on simplifying payroll compliance

• Updates to statutory payment frameworks under wider labour market reforms

(We can expand this section if further government detail is released.)

What This Means for Employers

• Payroll costs are rising, especially with higher minimum wage rates and employer NIC.

• Budgeting and workforce forecasting will be essential for 2026 onwards.

• Payroll errors become more likely as legislation layers become more complex.

• In-house payroll teams may become overstretched, increasing risk to compliance and accuracy.

• Now is the moment to review whether outsourcing payroll can deliver cost savings, continuity and compliance.

What This Means for Accountancy Firms

• Clients will need clear guidance on wage increases, NIC changes and pension reforms.

• As legislation becomes more complex, running payroll internally becomes more time-consuming and less profitable.

• This creates a perfect opportunity to use white-label or partnered payroll services through Qualitas to:

  • Maintain client revenue

  • Remove admin workload

  • Reduce compliance risk

  • Scale payroll without hiring

  • Strengthen your service offering

How Qualitas Can Support You

Qualitas provides specialist UK payroll services to both employers and accountancy firms, including:

• Fully outsourced or white-label payroll services

• Dedicated UK-based payroll executives

• Online portals for employees and employers

• BACS and Faster Payments capability

• Pension and auto-enrolment management

• Benefits & expenses support

• Compliance expertise across all legislative changes

Our service is designed to reduce cost, improve efficiency, and eliminate payroll risk, especially as legislative demands increase.

Request Your Free, No-Obligation Payroll Quote

If you want to understand how these Budget updates will affect your payroll costs and processes, or how outsourcing can reduce your administrative load, we can help.

Request a free, no-obligation quote today and see how Qualitas can support you through the year ahead with reliable, compliant and cost-effective payroll delivery.