The Autumn Budget 2025 – Essential Information
- elin9975
- 12 hours ago
- 3 min read
Which policies will most affect our sector? We take a look.
Minimum Wage Rates from April
Announcing that the Government has accepted the advice and recommendations of the Low Pay Commission (LPC), the Chancellor confirmed that therefore, from April;
National Living Wage will increase by 50p, to £12.71 per hour
The rate for 18-20 year olds will increase to £10.85 (an 8.5% increase)
The rate for 16 and17 year olds will rise to £8 (a 6% increase)
For our agency partners and contractors, there will be an increase in the minimum Umbrella pay rates to reflect these increases. We will notify you as soon as we have the confirmed figures, but please contact us for some early estimations.
Tax and National Insurance
The tax and NI threshold freeze is to be extended by three years, keeping the personal allowance at £12,570 and the higher rate at £50,270 in place for longer. In last year’s Budget, the government vowed that as of April 2028, the thresholds would be lifted in line with inflation, however, these thresholds have now been extended until 2030-31.
This is often referred to as a ‘stealth’ tax, because as wages increase, more workers will find themselves paying higher amounts of tax, as are dragged into the higher tax brackets. So though the Government has kept its pre-election promise by avoiding any outward increases to tax or NI, through these fiscal measures of ‘freezing’, the Chancellor aims to boost revenues indirectly.
Salary Sacrifice Pension Changes
Described as a tax relief that disproportionately benefits higher earners, the Government announced that there will be changes to salary sacrifice. From April 2029, both employers and employees will pay NICs on salary sacrificed pension contributions above £2,000 per year. This policy (estimated to raise around £4.7bn) is the second-largest revenue measure after the continued freeze on tax thresholds.
State pension increased by 4.8%
From April 2026, state pension is set to rise by 4.8% in line with average wage growth, maintaining the Government’s commitment to the triple lock.
Closing in on promoters of marketed tax avoidance
The Government will introduce new powers to close in on promoters of marketed tax avoidance, taking ‘significant action to pursue those who attempt to bend or break the rules’.[1] This includes launching a strengthened reward scheme for informants to HMRC who provide valuable information about companies facilitating tax avoidance.
A consultation on further measures to tackle promoters will be published in early 2026, but for now, we know that alongside the implementation of Joint and Several Liability in April 2026, the soon-to be established Fair Work Agency will scrutinise companies for underpayment of minimum wage, fraudulent operations and illicit businesses. A department called the ‘Hidden Economy’ Team will be established, to target high-risk sector known to have breaches of employment rights legislation alongside illegal working and tax issues.
If you haven’t already – now is the time to tighten up operations and compliance!
Some other key points from the Budget;
The Government will extend the employer NICs relief for employers hiring veterans in their first civilian role to April 2028.
Energy Bills - households will save £150 a year on average from April 2026, due to the Government ending the Energy Company Obligation scheme, removing various levies paid by consumers from bills.
ISA’s - the £20,000 annual allowance will be retained – but £8,000 will be ringfenced for investment in Stocks and Shares ISAs with a focus on UK businesses (over 65’s will still be able to use the full £20,000 in Cash ISA savings).
Benefits – announced the lifting of the two child benefit cap.
Student loans - the repayment threshold for Plan 2 student loans will be frozen at £29,385 for three years from April 2027.
Tax on property income – the Government will create separate tax rates for property income from 2027-28. Property basic rate will be 22%, higher rate will be 42%, and the additional rate will be 47%.
Home tax - there will be a new tax on houses worth more than £2m, levied annually at £2,500 for properties worth more than £2m and £7,500 for properties worth more than £5m. The so-called ‘Mansion Tax’ will be a high value council tax surcharge on properties worth over £2 million.
As the country digests the announcements, we’ll see how this impacts the government’s intended growth. After the announcements, The FTSE 100 index of the UK’s biggest listed companies went from positive to negative territory but soon made up any losses – suggesting that markets are broadly positive about the content of the budget[2].
We’ll be watching closely and updating our agency partners with any further announcements that will impact our industry.
Comments