The Autumn Budget 2026 introduced a range of measures affecting businesses, their employees, and the wider labour market, from increases to the minimum wage to proposed reforms designed to increase labour mobility. While some of these changes create new responsibilities for employers, others present an opportunity to review workforce planning, reward and benefits strategies, and the support provided to employees.
Below, we outline the headline changes, and explore the strategic moves that employers can make:
What was announced in the Autumn Budget?
The Budget introduced several new policies that could have a material impact on businesses and the individuals they employ:
A new Pension Tax Allowance for pensioners with total income at or below the value of the full new State Pension. The pension is expected to increase by 3.9% in April 2027, taking it above the frozen £12,570 personal tax allowance for the first time. The introduction of the allowance will equate to an effective saving of £93.20 for individuals on the new State Pension.
Planned cuts to the cash ISA allowance have been reversed. Under plans put forward by the previous Chancellor, Rachel Reeves, the cash ISA allowance was due to fall to £12,000 for under-65s, while uninvested funds in stocks and shares ISAs would be taxed at 22%. These changes will no longer go ahead. The Budget also put forward new initiatives for first-time buyers, including a First Time Buyer ISA to replace the existing Lifetime Isa from April 2029, and a new equity-loan scheme.
The minimum wage will increase by 3.9% from April 2027, to around £13.20 for adults. The rate for 18 to 20-year-olds will also increase by 3.9%, despite a Labour manifesto pledge to equalize it with the adult rate. While the decision may help to limit the cost of hiring young people, the likely above-inflationary increases mean that businesses continue to absorb higher employment costs. The same increase will apply to the National Living Wage.
More help for small businesses, via an increase in the threshold for small business rate relief for retail hospitality and leisure businesses from £12,000 to £18,000. This follows July’s announcement of a 20% cut to business rates for pubs, clubs, and smaller live music venues – taking effect in April 2027. The Government estimates that 70,000 businesses will see their rates fall to zero. The Budget also introduced a series of new allowances for founders and young entrepreneurs.
Commitments to encourage talent mobility, including reforms to the use of non-compete clauses, and a proposed consultation on the wider use of restrictive practices. Details of these reforms will be set out in early 2027. There were also pledges to reform certain visa requirements for skilled or high-potential individuals.
A time-limited household support package focused on cutting energy bills, including the removal of standing charges on gas bills, extension of the VAT cut on electricity bills to July 2027, and a new £100 energy payment for households in council tax bands A-D.
Sector-specific interventions, including an increase in Machine Games Duty from 20% to 25% on games with takes over £1 from April 2027, and a doubling of the bank corporate tax surcharge to 6% from January 2027, lasting 15 months.
Despite pre-Budget speculation, no updates were announced to the rate of Capital Gains Tax (CGT). There were also no further changes to the rates of Income Tax, VAT, employers’ NI contributions, or Stamp Duty Land Tax (SDLT).
What’s changing with inheritance tax?
The Budget contained no changes to the Government’s existing inheritance tax (IHT) reforms, first announced in the Autumn Budget 2024. As things stand, unused pension funds and pension death benefits will be brought within the value of a deceased person’s estate for IHT purposes from 6 April 2027. Depending on the circumstances, beneficiaries may also remain liable for income tax when drawing inherited pension benefits.
Updates to the pension “triple lock”
During the Labour Party Conference on 29 September 2026, ahead of the Budget announcement, Prime Minister Andy Burnham announced a policy to scrap the “triple-lock” on pensions, which guarantees that the state pension rises by the highest of 2.5%, inflation or earnings growth. The triple-lock will remain in place until 2030 – after the next election – at which point it is expected to become a “double-lock” (rising in line with either prices or 2.5%). MPs will legislate on the changes before the end of the current Parliament.
Salary sacrifice changes still due in 2029
There were also no updates to the existing plans for salary sacrifice. From April 2029, salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from NI contributions. Above the cap, usual NI rates will apply – at 15% for employers, 8% for employees on salaries below £50,270, and 2% on income greater than that. Once introduced, the cap will substantially increase employers’ NI liability, and the overall cost of employment.
Key takeaways for employers
The implications of the Budget will not impact every employer in the same way. Nevertheless, our experts have drawn out a few key themes that are likely to shape reward and benefit strategies in the years ahead:
Growing complexity of retirement planning – with IHT on pensions and forthcoming changes to salary sacrifice. For employees, the changes are likely to mean greater emphasis on retirement and estate planning strategies. Employers should prepare for increased demand for financial education and wellbeing. Higher earners and older employees may seek more personalised guidance around pension withdrawals and legacy planning. There may also be increased interest in broader retirement support offerings.
Financial wellbeing remains a workforce issue – the cost of living remains topical, despite efforts to alleviate the pressure on households. The energy cap is forecast to rise by 16% in January, to nearly £2000, while broader inflationary pressures continue to hit incomes. Cost-of-living concerns remain linked to stress, wellbeing and productivity. Employers may face renewed pressure to support employees through financial wellbeing programmes, emergency savings products, employee assistance programmes (EAPs), and employee discount schemes.
Retention strategies must evolve – Evidence from the Competition and Markets Authority suggests that more than a quarter (opens a new window) of UK employees are subject to non-compete clauses. Potential restrictions on the use of non-compete clauses could place employers under greater pressure to retain key talent, particularly for higher earners – although the detail of any reforms will not be set out until early 2027. Engagement, culture, and career progression could play an even greater role in retaining key talent. Depending on their extent, the reforms could also prompt reviews of employment contracts and alternative retention mechanisms, such as extended notice periods.
Cost management is crucial – With no change to NIC contributions, along with another uprating of the minimum wage, employers continue to absorb high employment costs – with smaller- to medium-sized enterprises (SMEs) feeling the greatest impacts. These ongoing pressures will likely encourage scrutiny of reward design, salary sacrifice arrangements, and workforce productivity initiatives, as employers look to offset costs. The recommendations of the forthcoming youth employment review could bring further changes to apprenticeship, early careers and workforce participation strategies.
Review your people strategy
From talent retention to retirement support and employee financial wellbeing, the policies announced in the Autumn Budget have the potential to shape workforce planning in the coming years. With that in mind, now is a valuable opportunity for employers to review their reward, wellness, and benefits programmes to ensure they remain aligned with the needs of their people and business.
To explore any of the issues discussed in this article, reach out to your usual adviser or contact a member of our People Solutions team.
