As a platform supporting thousands of employers across the UK, we’re sharing the key takeaways from today’s Budget announcement and what they mean for your business and your people.

1. National Insurance & Income Tax Thresholds Frozen Until 2031
The government has confirmed that NI and income tax thresholds will remain frozen for an additional three years, beyond the previous 2028 date.

Impact for employers:

• More employees will be pushed into higher tax bands as wages rise
• Increased employee NI and tax deductions may affect take-home pay and future wage expectations.
• Employers may experience more queries from staff around tax codes and pay calculations.

2. National Minimum Wage (NMW) Increase from April 2026

Over-21s (National Living Wage)
Rising 4.1%, from £12.21 → £12.71 per hour

18–20-Year-Old Rate
Rising 8.5%, from £10.00 → £10.85 per hour
This is part of the continued move toward a single adult rate for all workers.

Impact for employers:

• Payroll costs will increase, particularly for businesses employing younger staff.
• Potential to push up wages for other staff. 
• Ensure contracts, pay schedules, and HR systems are updated ahead of April.
• WorkSmarter’s document library has templates for letters as required. 

3. State Pension Payments Increasing 4.8%
Basic and new state pensions will rise by 4.8% next April under the government’s “triple lock” policy.

Impact for employers:

• Affects workforce planning and may influence retirement intentions among eligible employees.
• No employer action required, but useful context for conversations around flexible or phased retirement.

4. Salary Sacrifice Pension Contributions – NI to Apply Over £2,000 (from April 2029)
Employees using salary sacrifice to pay into their pension will start paying NI on contributions above £2,000 a year, beginning in 2029.

Impact for employers:

• Salary sacrifice remains beneficial but becomes less advantageous for higher contributors.
• Any pension contribution above this level would attract employee and employer National Insurance. Employees will see their take-home pay fall and employers will face higher payroll costs. 
• Employers may see questions from employees about the long-term value of salary exchange.
• No immediate action required, but useful to factor into long-term benefit planning.

5. Training for under-25s on apprenticeships
As part of the New Youth Guarantee, this training will be made free for small and medium-sized enterprises and will be backed with £820m over three years.

Impact for employers:

• The co-investment relief that is already in place for SMEs when they hire an apprentice under the age of 22, will be extended to those aged 22 to 24. 
• The government will work with employers to streamline the suite of apprenticeship standards available. 

6. Tax Changes for Gambling Companies
Online gambling firms will see tax on profits rise from 21% to 40% in April. The 10% bingo tax will also be abolished.

Impact for employers:

• Relevant only if you operate in, or supply, the gambling industry.
• No direct impact on general employers, but notable for sector-specific SMEs.

7.  Business Rates Lowered
Over 750,000 retail, hospitality and leisure properties will benefit from lower business rates tax rates. 

Impact for employers:

• This will come in from April 2026.
• Sectors hit hardest by revaluations from April 2026 will be supported by a £4.3 billion business rates support package to cap bill increases. 

8. Electric Vehicle Support
There will be £2bn support for EV transition and 10 year 100% business rates relief for eligible changepoints and EV-only forecourts. A one year extension will also be introduced to the 100% first year allowances for businesses buying zero emission cars and chargepoint infrastructure to April 2027.

Impact for employers:

• While this will cut costs for businesses, a new mileage-based electric vehicle excise duty will amount to 3p per mile for electric cars and 1.5p for plug-in hybrids. 
• The rate per mile will increase annually with CPI. 

What Happens Next?
WorkSmarter will continue monitoring the legislative updates and will implement any system changes required. We’ll keep you informed through our Legal Alerts and platform notifications. 

Need HR guidance, please contact us for more information.