Chancellor John Healey delivered his first Autumn Budget on 28 October 2026 with measures intended to support households, encourage business growth and improve opportunities for workers.
What are the key takeaways from the Autumn Budget and what could they mean for your business?
One of the most immediate considerations for employers is the increase to the National Living Wage and National Minimum Wage from 1 April 2027.
The new hourly rates will be:
The increase to £13.21 means a full-time worker earning the National Living Wage will receive approximately £910 more in gross annual pay.
The increase for 18- to 20-year-olds is also notable because it is smaller than some younger workers have experienced in recent years. The Government has faced concerns that rapidly rising wage costs for younger workers could discourage employers from recruiting the younger generation with less experience. This is particularly relevant as the number of young people not in education, employment or training remains a concern.
What does this mean for employers?
Although the increases will benefit employees, they will also add to payroll costs for businesses that employ people on or near the minimum wage.
Employers need to look beyond the hourly rate when assessing the financial impact. Increases at the lower end of the pay scale can create pressure to adjust the wages of more experienced employees, supervisors and managers to maintain appropriate pay differences across the workforce.
Planning ahead will help you prepare for the changes while maintaining a fair and consistent approach to employee pay.
The Budget does not increase the headline rates of Income Tax, employer National Insurance or VAT.
However, the Government is maintaining existing Income Tax and National Insurance thresholds, so employees may still pay more tax as their earnings increase.
The Personal Allowance, the amount most people can earn before paying Income Tax, remains £12,570. With wage increases pushing some employees’ earnings higher, employers may find that staff see a greater proportion of their additional pay taken up by tax and National Insurance.
The Chancellor announced plans to make it easier for UK businesses to attract and retain international talent, particularly in sectors where employers are finding it difficult to fill vacancies.
From spring 2027, the High Potential Individual visa route will cover graduates from the world’s top 150 universities, providing access to a wider pool of highly educated international candidates. This will extend the Graduate visa to two years for eligible universities.
In addition, highly skilled workers will have up to six months to find a new job before their visa is curtailed, giving businesses more opportunity to recruit experienced candidates who are already in the UK.
The Government has announced additional business rates support for eligible businesses in the retail, hospitality and leisure sectors.
From April 2027, the thresholds for Small Business Rate Relief will increase. Eligible properties with a rateable value of up to £18,000 will qualify for 100% relief, while properties with a rateable value of up to £21,000 will qualify for tapered relief. Eligible pubs, social clubs and live music venues will also receive increased relief.
For businesses operating in these sectors, the measures could help reduce property costs and free up money for other priorities, such as recruitment, staff development and investment.
From April 2029, eligible self-employed fathers, partners and adopters in Great Britain will gain access to parental pay under the new arrangements.
The change is intended to extend support to people previously excluded from the relevant parental pay system because they are self-employed.
Although this is not an immediate change for most employers, it forms part of a wider shift in how parental support is provided across different types of work. Employers should continue to monitor developments in family-related employment rights and ensure their policies and procedures remain up to date as further details emerge.
The government confirmed £100 million in funding over two years for the expanded apprenticeship scheme aimed at creating more opportunities for young people. Led by local mayors, the scheme will connect young people with local businesses to help them gain apprenticeships and improve their employment prospects.
Employers may have to disclose salaries in job ads in the future under new requirements. Further details have not been shared yet, including when the change is planned to take place.
The Government has announced plans to replace the current earnings limit for Carer’s Allowance with a tapered system.
Under the existing rules, eligible carers can lose their entitlement if their earnings exceed the weekly limit. The new approach is intended to prevent people from losing their entire allowance because they earn a relatively small amount over that limit.
The change is expected to be introduced in the 2030 to 2031 financial year.
One employment-related announcement worth watching is the Government’s intention to legislate on non-compete clauses.
Employers sometimes include these clauses in employment contracts to prevent employees from joining a competitor or starting a competing business for a period after leaving.
The Government intends to remove non-compete clauses as a barrier to hiring for promising start-ups and scaling businesses. It will also consult on the wider use of restrictive practices before setting out its detailed position in early 2027.
Employers do not need to make immediate changes to employment contracts based on this announcement alone. However, employers should be aware that the rules on post-employment restrictions may change.
The Budget included measures designed to encourage entrepreneurship, investment and business growth.
A new Founders Relief will offer eligible founders of high-growth, innovative companies a reduced 10% Capital Gains Tax rate on up to £10 million of lifetime gains.
Trading Allowance will increase from £1,000 to £3,000 from 6 April 2027. This will allow individuals to earn up to £3,000 a year from trading and miscellaneous income without paying Income Tax on that income.
A Young Entrepreneurs Allowance for younger people to help cover a year of living costs while establishing a business.
The government will double the British Business Bank’s investment in women-led businesses and funds to £200 million to support female entrepreneurs.
EMI2, an expansion of employee share schemes designed to help growing businesses attract and retain staff by offering more generous share options.
The Autumn Budget 2026 brings some targeted support for businesses, alongside measures intended to encourage investment and entrepreneurship. However, the increase in minimum wage rates is likely to be the most immediate HR and payroll consideration for many employers.
Our team can help you understand employment law changes, review your HR policies and procedures, and plan for the impact of changes on your workforce. Get in touch with us if you would like support preparing your business for the year ahead.
To find out more information or to discuss the impact of the Autumn Budget 2026, please get in contact with our team of experts.
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