The Autumn Budget 2026 was announced on 28 October, bringing several changes that UK employers will need to prepare for over the coming months.
For smaller businesses, one of the biggest announcements is the increase to the National Living Wage from April 2027. But there are other changes worth knowing about, including business mileage allowances, support for recruiting apprentices and proposed reforms to employment contracts.
We’ve picked out the announcements that matter most from an HR and people management perspective, along with a few upcoming changes employers should have on their radar.
Here’s what you need to know.
National Living Wage increases to £13.21 from April 2027
One of the biggest considerations for employers is the increase in the National Living Wage and National Minimum Wage.
From 1 April 2027, the National Living Wage for workers aged 21 and over will rise from £12.71 to £13.21 per hour, an increase of 3.9%.
The Government has also confirmed increases for younger workers and apprentices.
What are the new minimum wage rates for 2027?
| Age group | Current hourly rate | From 1 April 2027 |
|---|---|---|
| 21 and over | £12.71 | £13.21 |
| 18–20 | £10.85 | £11.27 |
| 16–17 | £8.00 | £8.31 |
| Eligible apprentices | £8.00 | £8.31 |
The apprentice rate applies to apprentices under 19, or those aged 19 and over who are still in the first year of their apprenticeship.
You can find the full details in the Low Pay Commission’s announcement.
What does this mean for employers?
If you employ staff on or close to the minimum wage, you’ll need to account for these increases when planning your staffing costs for 2027.
Someone working 37.5 paid hours a week on the National Living Wage will receive an additional £975 in annual basic pay, assuming they work those hours throughout the year.
For a business with 20 or 30 employees affected by the increase, that can quickly add up, even before accounting for additional employer costs.
There’s another issue employers should be thinking about: the gap between different pay grades.
Say you’ve got an experienced employee earning £13.50 an hour, while someone new to the business earns the minimum wage.
Once the National Living Wage increases to £13.21, the difference between those employees becomes much smaller.
This can create difficult conversations around pay, particularly where experienced employees have additional responsibilities.
It’s worth reviewing your wider salary structure, rather than simply increasing the wages of those who fall below the new minimum.
Employer National Insurance remains at 15%
Following the changes introduced in April 2025, many businesses have already been dealing with higher employer National Insurance costs.
The Autumn Budget 2026 did not announce another increase to the standard employer NI rate.
For the 2027/28 tax year:
- The standard employer National Insurance rate remains at 15%.
- The standard annual secondary earnings threshold remains at £5,000.
- The Employment Allowance remains at £10,500 for eligible businesses.
Different employer NI thresholds apply to certain employees, including qualifying workers under 21 and apprentices under 25.
Although the standard rate isn’t changing, employers will still need to consider the effect of rising wages on their overall payroll costs.
If an employee’s salary increases, the amount of employer National Insurance payable may also increase. Employer pension contributions could rise too, depending on the pension arrangements in place.
For smaller businesses operating with tight staffing budgets, it’s worth reviewing the full cost of employing someone rather than looking at their basic salary alone.
This is especially relevant for labour-intensive sectors such as hospitality, retail and care, where wages can account for a substantial proportion of business costs.
Changes to how employee benefits are reported through payroll
Another change coming in April 2027 concerns how employers report certain employee benefits to HMRC.
Although this reform was announced before the Autumn Budget, it’s an important upcoming change for businesses preparing for the new tax year.
From 6 April 2027, employers will generally be required to report the following benefits through payroll in real time:
- Company cars and car fuel benefits
- Company vans and van fuel benefits
- Employer-provided medical insurance
Currently, many employers report these benefits through annual P11D forms.
Under the new arrangements, Income Tax and the associated employer Class 1A National Insurance contributions for payrolled benefits will be reported and accounted for through payroll in real time.
From April 2028, mandatory payrolling will extend to most other benefits, although employer-provided loans and accommodation will remain outside the mandatory requirements for now.
What should employers do?
If you offer company vehicles or private medical insurance, now is a sensible time to check that your payroll processes and software will be ready.
It’s also worth speaking to employees before the changes happen.
The way their benefits appear on payslips and how tax is collected may look different. HMRC has confirmed that the change in reporting method itself won’t increase the amount of tax employees owe.
You can find more information in HMRC’s guidance on mandatory payrolling of benefits.
Business mileage allowances are increasing
For businesses with employees who regularly use their own vehicles for work, there’s a change worth reviewing.
Earlier in 2026, the tax-free mileage allowance for cars and vans increased to 55p per mile for the first 10,000 business miles, with effect from 6 April 2026.
The Autumn Budget confirmed that the 55p rate will become permanent.
From 6 April 2027, the approved tax-free allowance for business mileage above 10,000 miles will also rise from 25p to 35p per mile.
This could be particularly relevant to businesses with field-based employees, care workers, sales teams or staff who regularly travel between client locations.
If your business has an existing mileage or expenses policy, this is a good opportunity to review it and make sure staff understand what they can claim.
More support for businesses recruiting apprentices and young people
Finding the right people and developing their skills can take time, especially when you’re running a smaller business.
The Budget confirmed a further £100 million across 2027/28 and 2028/29 to expand local apprenticeship support in England.
This funding will extend Mayoral Apprenticeship Brokerage Pilots from 7 to 14 Mayoral Strategic Authorities, helping young people access apprenticeships and supporting employers, particularly SMEs, to create opportunities.
Financial support for taking on apprentices
The Budget also referred to recruitment incentives introduced earlier in 2026.
These include a £2,000 apprenticeship hiring payment for eligible employers in England who don’t pay the Apprenticeship Levy and recruit a new employee aged 16–24 into an eligible apprenticeship.
The scheme applies to qualifying starts from 1 October 2026, with payments made in stages through the apprenticeship training provider.
A separate Youth Jobs Grant of up to £3,000 is available to eligible employers across Great Britain who recruit young people aged 18–24 who have been unemployed and claiming Universal Credit for at least six months.
The job must meet the scheme’s requirements, including a minimum of 25 hours per week and an intended duration of at least four months. Employers must register and meet the relevant eligibility conditions.
For smaller businesses, these schemes may make it more affordable to bring new talent into the workforce.
If you’re thinking about hiring in 2027, it’s worth exploring the available support before starting the recruitment process.
You can check the Government’s apprenticeship funding information and Youth Jobs Grant guidance for full eligibility details.
Changes to non-compete clauses in employment contracts
The Autumn Budget also confirmed plans to reform non-compete clauses in employment contracts.
These clauses are sometimes used to restrict an employee from joining a competing business, or starting a competing business themselves, for a specified period after leaving their employer.
The Government wants to make it easier for employees to move between jobs and for growing businesses to recruit experienced people.
However, the changes are not yet in force.
The Government plans to consult on restrictive practices and set out more detailed proposals in early 2027 before introducing legislation.
Why should employers pay attention?
If your business uses non-compete clauses, particularly for senior employees or roles involving commercially sensitive information, these proposals are worth keeping an eye on.
Any future changes could affect how businesses approach employment contracts, employee retention and the protection of confidential information.
For now, there’s no need to assume existing clauses have been abolished.
But it may be a sensible time to review your employment contracts and understand where restrictive terms are being used.
Other Budget announcements worth knowing about
A few other measures may be relevant depending on your business, industry and workforce.
Employee share schemes
From April 2027, the Government plans to increase the individual option limit under the Company Share Option Plan (CSOP) from £60,000 to £120,000.
CSOP will also be renamed EMI2, alongside other changes to how the scheme operates.
This could be relevant for growing businesses that use share-based rewards to attract and retain employees.
Business rates relief
For qualifying retail, hospitality and leisure properties in England, the Government is increasing the rateable-value thresholds for Small Business Rates Relief from April 2027.
The threshold for full relief will increase from £12,000 to £18,000, with tapered relief available for qualifying properties up to £21,000, subject to the relevant eligibility rules.
Although this isn’t an HR change, it may be relevant to businesses reviewing their overall operating costs alongside rising wage bills.
Recruiting skilled workers from overseas
The Budget also confirmed plans to implement changes to work visa salary requirements from spring 2027, following recommendations from the Migration Advisory Committee.
The changes include adjustments to occupation-specific salary thresholds and how salary requirements are updated.
For businesses that sponsor overseas workers, these changes could affect recruitment planning. Employers should check the final immigration rules before making decisions based on the proposed thresholds.
What should employers be doing now?
April 2027 might seem some way off, but preparing ahead gives businesses more time to make changes without rushing.
Here are a few things worth putting on your list:
- Review employee pay rates. Identify anyone who will fall below the new minimum wage and consider how the increases affect your wider pay structure.
- Revisit your staffing budget. Account for wage increases, employer National Insurance and relevant pension costs.
- Check your payroll processes. If you provide taxable employee benefits, make sure your payroll arrangements will be ready for April 2027.
- Review your HR policies. Mileage and expenses policies may need updating. Keep employment contracts under review as the non-compete proposals develop.
- Plan future recruitment. If you’re considering apprenticeships or recruiting younger employees, check whether your business could qualify for government support.
You don’t necessarily need to make every change immediately. The important thing is understanding which announcements affect your business and when action is required.
Need help preparing your business for 2027?
Keeping up with changes to employment costs, HR policies and employment contracts can be difficult when you’re also busy running a business.
At MYHR Consultancy, we work with SMEs to make people management simpler.
Whether you need support reviewing your salary structure, updating employment contracts or preparing your HR processes for upcoming changes, our experienced HR consultants can help you work through what matters for your business.
Get in touch with MYHR Consultancy to find out how we can help you prepare for the year ahead.