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SafeHR
After weeks of speculation and leaks, the proposals are now confirmed, and the Chancellor’s Autumn Budget was delivered on 26th November 2025.
It sets out a series of changes that will affect employers from April 2026 onwards. From wage increases to pension reforms, this Budget introduces measures that will shape payroll, benefits, and compliance for years to come.
This update is relevant to all employers, regardless of size or sector.
Whether you’re a small business owner managing apprentices, a mid-sized company with salary sacrifice schemes, or a large employer with dividend-paying shareholders, the measures announced will have direct implications for your workforce and financial planning.
The government has confirmed new rates:
| Category | Current rate | New rate | % Increase |
| National Living Wage (21+) | £12.21 | £12.71 | 4.1% |
| 18-20 Year Olds | £10.00 | £10.85 | 8.5% |
| 16–17 Year Olds | £7.55 | £8.00 | 6% |
| Apprentice Rate | £7.55 | £8.00 | 6% |
| Accommodation Offset | £10.66 | £11.10 | 4.1% |
The sharper rise for 18–20-year-olds shows the government’s commitment to closing the gap between younger and older workers, with the long-term aim of moving towards a single rate for everyone aged 18 and over. For employers, this means payroll costs will go up more noticeably in sectors with a younger workforce, such as retail, hospitality, and care.
The best way to stay ahead is to start planning now. Review your budgets, think about how these changes might affect contracts, and make sure your payroll systems are ready to apply the new rates automatically. You don’t want to be fined for underpaying staff because the right rates weren’t in place. A little preparation now will make the transition smoother for both your business and your team.
A major change is coming:
This is one of the standout changes in the Budget and it will reshape how salary sacrifice works for pensions. Until now, these schemes have been a tax‑efficient way for employees to save more while reducing NICs. By capping the exemption at £2,000, the government is limiting their appeal, especially for higher contributors.
For employers, the priority is preparation. If you offer enhanced pension contributions or bonus sacrifice, start reviewing them now and model the extra NIC costs. Even though the change won’t happen until 2029, early planning with payroll and benefits teams will make sure you’re ready and avoid any last‑minute surprises.
The Chancellor confirmed that thresholds will remain frozen until April 2031:
Freezing tax thresholds might sound technical, but in practice it means more employees will gradually slip into higher tax bands as wages rise—even though the headline tax rates haven’t changed. For staff, this can feel like their pay isn’t stretching as far, and it may lead to questions or even pressure for salary reviews.
For employers, the best step is to be prepared. Make sure HR and payroll teams understand the impact of this, so they can explain it clearly to employees. Factor this into workforce planning and think ahead about how pay reviews or benefits might help ease concerns.
From April 2026, SMEs will benefit from full government funding for training costs of apprentices under 25.
This takes away one of the biggest barriers to bringing young people into the workforce and makes apprenticeships a much more affordable option.
For employers, this is a chance to think strategically. Where could apprentices add value in your business? Are there areas where you’re struggling to recruit or facing skills shortages? With training costs covered, you can redirect resources into mentoring and supporting apprentices, so they become a strong part of your team.
From April 2026, dividend tax rates will rise:
This will have a direct impact on business owners and shareholders who rely on dividends as part of their income. For companies structured as limited businesses, it may change how profits are distributed and how directors choose to pay themselves.
For employers, the key is to review your remuneration strategy. Salary payments could become relatively more attractive compared to dividends, so it’s worth modelling the options now and speaking with your accountant or payroll provider.
There’s a lot of detail in this Budget, and we’ve only been able to cover some of the key points here.
One of the biggest changes to watch is the reform of salary sacrifice schemes. If you currently offer salary or bonus sacrifice arrangements, it’s important to start thinking about how these changes could affect both your workforce and your budgets. The delayed start date gives you time to prepare, but the reality is that extra costs will need to be built into your future planning.
Alongside pensions, the Budget also brings immediate changes to wages and taxes. Employers don’t have the luxury of waiting here, minimum wage increases and tax adjustments will take effect from April 2026, so payroll systems and budgets need to be ready well in advance.
At SafeHR, we make sure minimum wage increases are automatically applied in the system and we’ll publish a Statutory Rates Guide for 2026 to give our clients a clear, reliable reference for compliance.
Our goal is to make these transitions as smooth as possible for you. Whether you want practical advice on protecting your business or simply need clarity on what the changes mean, our expert team is here to support you.
Get in touch with SafeHR today and we’ll help you plan with confidence.
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