The Autumn Budget 2026, announced on 28 October, confirmed changes that could affect how much businesses pay to employ staff.
While National Insurance rates remain unchanged, most thresholds will stay frozen for several more years. Minimum wage rates will also increase from April 2027.
For employers, these changes are worth keeping in mind when planning wages, payroll costs and business budgets for the year ahead.
Here’s what you need to know.
National Insurance Thresholds Remain Frozen
National Insurance is paid by both employees and employers, although they pay it at different rates.
The Budget confirmed that the main National Insurance thresholds will remain frozen until April 2031.
For employers, the key figures are:
- Employer National Insurance rate: 15%.
- Employer National Insurance threshold: £5,000 a year.
- Employment Allowance: Up to £10,500 a year for eligible businesses.
The £5,000 threshold means employers generally start paying National Insurance when an employee’s annual earnings exceed this amount.
Although the rate isn’t increasing, keeping the threshold frozen could mean higher National Insurance costs as employee wages rise.
For example, if you increase an employee’s salary, the additional earnings may also increase the National Insurance your business has to pay.
Employment Allowance Remains at £10,500
The Employment Allowance helps eligible employers reduce their annual National Insurance bill.
For 2027/28, the allowance will remain at £10,500.
This means a qualifying business could reduce its employer National Insurance costs by up to £10,500 over the tax year.
However, not every business can claim it. For example, a company with only one director who is also its sole employee and the only person liable for employer National Insurance will generally not qualify.
For smaller businesses, this allowance can make a substantial difference to payroll costs, so it’s worth checking whether you’re eligible and claiming it correctly.
Minimum Wage Rates Increase from April 2027
The Budget confirmed a 3.9% increase in the National Living Wage and National Minimum Wage from 1 April 2027.
The new hourly rates will be:
| Age group | Current rate | From April 2027 |
| 21 and over | £12.71 | £13.21 |
| 18–20 | £10.85 | £11.27 |
| Under 18 | £8.00 | £8.31 |
| Apprentices* | £8.00 | £8.31 |
The apprentice rate generally applies to apprentices under 19, or those aged 19 and over who are in the first year of their apprenticeship.
How Could This Affect Your Payroll Costs?
If you employ staff on or close to the minimum wage, you’ll need to make sure their pay meets the new rates from April.
For example, an employee aged 21 or over who works 37.5 hours a week at the National Living Wage would see their gross annual pay increase by approximately £975, assuming they work those hours for 52 weeks.
For employers, the additional cost may be higher once National Insurance and employer pension contributions are taken into account.
Even businesses already paying above the minimum wage may want to review their pay structures to maintain appropriate differences between roles.
Employee National Insurance Rates Remain Unchanged
Employees will continue to pay National Insurance at the following main rates:
- 8% on earnings between £12,570 and £50,270 a year.
- 2% on earnings above £50,270.
These thresholds will also remain frozen until April 2031.
For employees, this means that a pay rise could result in more National Insurance being paid, even though the rates themselves haven’t changed.
For employers, the main consideration is making sure payroll systems are using the correct thresholds and deductions.
Mileage Allowances and Company Cars
The Budget also confirmed changes to the tax-free mileage allowances available to employees and self-employed people who use their own cars or vans for work.
The current rate 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 also increase from 25p to 35p per mile.
The Budget also announced a further increase in company car tax rates for 2030/31.
These changes are worth noting if you or your employees regularly use personal vehicles for business journeys.
Preparing for April 2027
Although most of these changes won’t take effect until April 2027, they could influence your staffing budget well before then.
If you employ staff, now is a useful time to review your payroll costs, particularly if you have employees on the minimum wage or are planning pay increases.
You may also want to check whether your business qualifies for Employment Allowance and make sure any upcoming changes are reflected in your financial forecasts.
At ammu, we work with businesses across Glasgow, Ayrshire and beyond to help them manage their finances and plan for future costs.
If you’d like to discuss how the Autumn Budget 2026 could affect your business, get in touch with our team.
You can also download our Autumn Budget 2026 Summary for a more detailed breakdown of the announcements.