Autumn Budget 2025: What Business Leaders Need to Know

The 2025 Autumn Budget has introduced a range of measures that will impact payroll, employee benefits, and overall workforce-cost planning. These changes include adjustments to tax thresholds, changes in minimum wage, as well as updates to benefit schemes and incentives that are likely to affect employee compensation packages.

For business leaders, staying on top of these developments is key to ensuring compliance, optimising business costs, and maintaining competitive and attractive remuneration packages.

Here’s a detailed breakdown of the key updates you need to be aware of, along with practical considerations for how your organisation might need to respond to combat any negative impact.

Key changes from the Autumn Budget 2025

1. Freeze of income tax & National Insurance thresholds extended

As confirmed by the Chancellor, the thresholds for income tax and National Insurance will remain frozen until at least the tax year 2030/31. Due to inevitable inflation or pay rises, this means that more employees could be pushed into higher tax bands. Ultimately, this will affect their take-home pay and, in turn, their morale.

💡Action to consider: Prepare for higher employer National Insurance contributions (NICs) – not as a result of increased rates, but as a result of ‘fiscal drag’ – and think about any additional, low-cost or no-cost benefits you might want to introduce to help morale and satisfaction remain high.

 

2. National Minimum Wage goes up (from April 2026)

This one comes as no surprise (with it being an annual occurrence!). From April 2026, the hourly minimum wage will increase for all age groups. The table below provides a breakdown:

Age	Current	From April 2026
Apprentice	£7.55	£8
Under 18	£7.55	£8
18-20	£10	£10.85
21+	£12.21	£12.71

 

💡Action to consider: Budget ahead for wage bill increases – particularly if you employ many lower-paid staff. Remember to double-check all pay rates come April to remain compliant with employment law and ensure your payroll systems are updated accordingly.

 

3. Salary-sacrifice pension contributions capped

From April 2029, only the first £2,000 per year of salary-sacrifice pension contributions will remain exempt from NICs. Any amount above that will be subject to full National Insurance payments from both the employee and employer.

💡Action to consider: Although initially a big hitter for many listening in to the Budget announcement, when you take a step back, the new cap will not actually be implemented until 2029. This means that until then, the existing rules remain in place. You may want to take this opportunity to benefit from a salary sacrifice scheme while you can – essentially saving both you and your employees money by reducing tax and NIC-able pay.

 

4. New mileage-based tax on electric and plug-in hybrid vehicles (from April 2028)

From April 2028, electric vehicles will be subject to a 3 pence-per-mile mileage tax, while plug-in hybrids will face 1.5 pence-per-mile. For the latter, this will be in addition to the existing road tax.

💡Action to consider: If you offer company cars or electric vehicle benefits, this change may increase total costs. Until 2028, the current rules around electric vehicles remain unchanged – but it might be worth revisiting any car benefit schemes or transport allowances in plenty of time, keeping this mileage tax increase in mind.

 

5. Student loan repayment thresholds frozen (from April 2027)

The Chancellor confirmed that Plan 2 student loan repayment thresholds will be frozen for three years from April 2027. This means the current income level at which graduates begin repaying their loan will remain fixed rather than rising with inflation. Like the tax and NI threshold freeze, as salaries naturally increase over time, more employees are likely to move into repayment sooner or repay a larger proportion of their income.

💡Action to consider: To prepare ahead of time, brief your payroll teams on what the freeze means in practice. It may also be worth building this into financial wellbeing support, as it’s likely to affect how employees perceive the value of pay increases.

 

6. Fully funded SME apprenticeships for under-25s

A new scheme (the growth and skills levy) is set to give eligible SMEs fully funded training for eligible apprentices aged under 25. This will remove one of the main barriers that previously held some employers back from taking on apprentices, and in some ways, offset the impact of the increase in the National Minimum Wage for apprentices previously mentioned.

💡Action to consider: This change will provide a cost-effective route to upskill and grow internal capability – and is the perfect opportunity for you to revisit your long-term workforce planning, leveraging this funding.

 

7. Extended employer NIC relief for veteran hires

The relief from employer National Insurance contributions when hiring former regular armed forces personnel, which was previously due to end in April 2026, has now been extended through to the 2027/28 tax year. This gives employers an additional two years to benefit from reduced employment costs when bringing veterans into their teams.

💡Action to consider: Take advantage of this financial incentive for the additional period – not solely to lower your employment costs, but to benefit from the valuable skills Veterans can bring, including resilience, leadership, and teamwork.

 

8. Reduced Capital Gains Tax relief for Employee Ownership Trusts (EOTs)

From 26 November 2025, any qualifying disposal to an Employee Ownership Trust will now receive only 50% Capital Gains Tax relief rather than the 100% previously available. This essentially increases the tax due on EOT transfers and may shift the view of using Employee Ownership Trusts as part of exit plans.

💡Action to consider: SME owners may want to speak with financial and legal advisers sooner rather than later to reassess ownership plans, model any tax implications, and explore whether alternative succession routes may now be more beneficial.

 

Offering wide-reaching support for SMEs – from HR to employment lawyers and employee benefits specialists – Omny Group can help your organisation remain compliant with the Autumn Budget reforms, and work with you to build powerful people strategies that benefit both you and your teams. Contact us today to learn more.