UK Autumn Budget 2025 highlights for HR and business leaders

The Autumn Budget 2025 has landed, announced by the Chancellor of the Exchequer, Rachel Reeves. Several changes will affect payroll, wages, pensions, company cars, and overall workforce costs. Here’s a simple breakdown of what HR teams and business leaders need to know.

Increase in National Minimum Wage

As every year, the National Minimum Wage (NMW) is due to increase in 2026. From April 2026, the hourly rate will change as follows:

For employers, this means wage bills will increase (especially for lower-paid employees), and salary checks should be conducted to ensure no one is paid less than the new rates come April.

Payroll/HR systems should also be amended to reflect these changes, including updating automated NMW triggers that flag any payslips below the minimum amount for an employee’s age.

Freeze on existing income tax & National Insurance thresholds

The Budget confirmed that income tax and NI thresholds will remain frozen for an additional three years than originally planned – now taking us up until the end of tax year 2030/31.

Although there has been no increase in income tax rates, it’s the impact of future salary increases in line with inflation that will drag some employees into higher tax bands.

For HR and business leaders, prepare for increased employer NI contributions, along with clear explanations in response to employee queries over why salary increases don’t really feel like much of an increase.

Salary-sacrifice pension cap

From April 2029, only the first £2,000 per year of salary-sacrifice pension contributions will benefit from National Insurance savings.

Anything over £2,000 pa will be liable for National Insurance deductions for both employee and employer, in the same way as other employee pension contributions.

This means that, although a long while away yet, higher earners will likely see less value in salary sacrifice pensions, and employers may need to review benefits and total reward strategies. Again, business leaders will also need to plan to update their payroll/HR systems accordingly in line with the changes.

New mileage tax on electric vehicles

Electric cars will be taxed a road charge of 3p per mile, while plug-in hybrid cars will be charged at 1.5p per mile, from April 2028. As per the Chancellor’s Budget document, this will be “via a modest self-reported per-mile levy.”

For plug-in hybrids, this charge will be on top of their existing road tax. As such, this will be something to consider when crafting and offering employee benefits packages.

Student loan threshold freeze

The repayment and interest rate thresholds for Plan 2 student loan repayments will be frozen for three years from April 2027. Although this is still a while away, it’s worth making sure your payroll teams are aware of the freeze ahead of time.

SME apprenticeships to be fully funded

As part of the growth and skills levy, which will replace the existing apprenticeship levy, the Chancellor announced she will make training for eligible under-25 apprentices completely free for small to medium-sized businesses, aiming to get more young people into work.

For HR teams, this creates a valuable opportunity to strengthen early-career talent pipelines without increasing training budgets. Employers can consider using this scheme to upskill apprentices and help fill skills gaps in areas where recruitment is challenging.

Extension of employer NICs veteran’s relief

The existing National Insurance contributions relief for employers that hire former members of the UK regular armed forces was due to come to an end on 5^th April 2026. It was announced that this relief will be extended for a further two years and will now continue until the tax year 2027/28.

Changes to employee ownership trusts

The relief from Capital Gains Tax available on qualifying disposals to Employee Ownership Trusts will be reduced from 100% to 50%. This will apply to all disposals made on or after 26^th November 2025.

With the 2025 Autumn Budget announcing several employment law changes – many resulting in increased employer taxes and costs – you may wish to speak with an HR professional to ensure you remain compliant as they come into effect.

Our team at Vero HR is always happy to help. Contact us today to find out how we can help you implement these changes, update your existing policies, or provide hands-on HR support.