Autumn Budget 2025: Key points for employers

We summarise the key points from the Budget for employers to note.

National Minimum and Living Wage

From 1 April 2026, the National Living Wage (for workers aged 21 and over) will increase by 4.1% to £12.71 per hour.

The National Minimum Wage for 18-20 year olds will also increase by 8.5% to £10.85 per hour and for 16-17 year olds and apprentices by 6% to £8 per hour.

Salary sacrifice pension NI relief cap

The Government will charge employer and employee NICs on pension contributions above £2000 per employee per year which are made via salary sacrifice.

This change will take effect from 6 April 2029.

Freeze on Income Tax thresholds

The Government will maintain income tax thresholds and the equivalent NICs thresholds for employees and self-employed individuals at their current levels for a further three years from April 2028 to April 2031.

Key takeaways

  • Employers should ensure that they comply with the increased National Living Wage and National Minimum Wage, while noting that this may lead to higher wage costs, in conjunction with the freeze on income tax thresholds.
  • Employers should also review salary sacrifice schemes in due course from a design and cost perspective.