The Chancellor announced the Autumn Budget on 28 October 2026.
And while the main rates of Income Tax, National Insurance, VAT and Corporation Tax haven’t increased, there’s still plenty for employers to think about.
The National Living Wage is going up again, changes to employee expenses and payroll reporting are on the way, and the government is considering reforms that could affect employment contracts.
There is some good news too, including additional support for businesses looking to recruit apprentices.
So, what does the Budget mean for you as a business owner and employer?
Here’s our breakdown of the key employment-related announcements and what you should be doing to prepare.
Minimum wage increases from April 2027
What’s changing?
All National Minimum Wage rates will increase by 3.9% from 1 April 2027.
| Aged 21 and over | £13.21 |
| Aged 18 to 20 | £11.27 |
| Aged 16 to 17 | £8.31 |
| Eligible apprentices | £8.31 |
The accommodation offset will also increase to £11.53 per day.
What this means for your business
If you employ people on or close to the minimum wage, your payroll costs will increase.
And it’s not just the hourly rate you need to consider.
Higher wages can also mean higher employer National Insurance contributions, pension contributions and overtime costs.
You may also need to review salaries for more experienced employees and supervisors to maintain appropriate differences between roles.
What you should do
Calculate what the new rates will cost your business from April 2027, including the additional employment costs.
Review your wider pay structure and consider whether any adjustments are needed before making recruitment or staffing decisions.
Higher tax-free mileage allowances
What’s changing?
The Budget confirms that the tax-free mileage allowance of 55p per mile for the first 10,000 business miles will become permanent.
From 6 April 2027, the allowance for mileage above 10,000 miles will increase from 25p to 35p.
These rates apply to eligible employees and self-employed people using their own cars or vans for business journeys.
What this means for your business
If employees use their own vehicles for work, the changes could affect your mileage and expenses policies.
You aren’t required to reimburse employees at the maximum tax-free rate, but you may want to consider whether your existing arrangements remain appropriate.
What you should do
Review your mileage policy, communicate any changes to employees and ensure business mileage is recorded accurately.
Changes to payroll reporting for employee benefits
What’s changing?
The Budget confirms a revised timetable for mandatory payrolling of taxable employee benefits.
From 6 April 2027, company cars, vans, fuel and medical benefits will generally need to be reported through payroll.
Most other taxable benefits will follow from April 2028, replacing much of the existing P11D reporting process.
What this means for your business
If you provide company vehicles, private medical insurance or other taxable benefits, you may need to change how these are recorded and reported.
The changes could also affect how benefits and deductions appear on employees’ payslips.
What you should do
Speak to your payroll provider or accountant to confirm which changes apply and ensure your employee benefit records and payroll systems are ready.
Proposed changes to non-compete clauses
What’s changing
The government plans to reform non-compete clauses, which restrict employees from joining competitors or establishing competing businesses after leaving their employer.
Further consultation is expected before legislation is introduced.
What this means for your business
If your employment contracts contain non-compete clauses, future reforms could affect how enforceable those restrictions are.
There are no immediate changes requiring employers to remove existing clauses.
What you should do
Review your existing employment contracts and consider whether your restrictions are reasonable and necessary to protect confidential information, customer relationships and other legitimate business interests.
Keep an eye on the proposals as they develop.
More support for apprenticeships and recruitment
What’s changing
The government is providing £100 million over two years to expand apprenticeship support through mayoral authorities in England.
The aim is to help smaller employers find and recruit apprentices.
Apprentices will also need to account for at least 3% of the workforce on large government construction and infrastructure projects.
What this means for your business
If you’re struggling to recruit or want to develop skills within your business, apprenticeships could offer another way to build your workforce.
Additional support may make apprenticeships more accessible to smaller employers, although availability will depend on your location and eligibility.
What you should do
If you’re planning to recruit, investigate the apprenticeship support available locally and consider whether an apprentice could meet your business needs.
What should employers do now?
The biggest immediate priority is preparing for higher employment costs from April 2027.
But there are other changes worth planning for too.
Here are five practical steps to take:
- Calculate your new employment costs. Work out how the minimum wage increases will affect your payroll, including employer National Insurance, pension contributions and overtime.
- Review your pay structure. Consider whether existing salaries remain fair and competitive, particularly for employees earning slightly above the new minimum wage.
- Check your mileage and employee benefits arrangements. Review your expenses policies and speak to your payroll provider about upcoming reporting changes.
- Review your employment contracts. Check existing non-compete clauses and monitor the government’s proposed reforms.
- Review your recruitment plans. Factor higher employment costs into your budgets and investigate whether apprenticeship support could benefit your business.
Need help preparing your business for 2027?
The Budget is another reminder that the cost of employing people continues to change.
And with further employment law reforms on the horizon, there’s plenty for business owners to think about as we head into 2027.
Whether you need help reviewing your pay structure, updating employment contracts or planning your workforce, we’re here to help.
Get in touch if you’d like to discuss what these changes mean for your business and how we can help you prepare.
This guide summarises selected employment-related measures announced, confirmed or updated in Budget 2026. Some measures remain subject to legislation, consultation or further guidance. Eligibility and implementation may vary.