Autumn Budget 2026: what changed for employers
The Budget on 28 October 2026 left employer National Insurance, its thresholds and the Employment Allowance where they are for 2027/28. The main new figure for payroll is the minimum wage: the National Living Wage goes up to £13.21 an hour on 1 April 2027. Further out, employers will need a Direct Debit instruction for PAYE from 6 April 2029, unless they are exempt.
The short version. In 2027/28 employer NI stays at 15% above a Secondary Threshold of £96 a week, and the Employment Allowance stays at £10,500 a year. The next date to act on is 1 April 2027, when the new minimum wage rates start. If you sponsor Skilled Worker visas, one change applies from Budget day itself: see the overseas section below.
The lines that matter, before and after
The first column is 2026/27 as it stands, taken from our 2026/27 rates page. The other two come from the documents published on 28 October 2026. The Budget documents give National Insurance thresholds as weekly figures, so that is how they appear here.
| Line | 2026/27 today | Announced 28 October | Takes effect |
|---|---|---|---|
| Employer (secondary) NI rate | 15% | No change: 15% in 2027/28 | 2027/28 tax year |
| Secondary Threshold | £5,000 a year | No change: £96 a week in both 2026/27 and 2027/28 | Held at 2026/27 levels until the 2030 to 2031 tax year, as previously announced |
| Employment Allowance | Up to £10,500 a year | No change: £10,500 a year per eligible employer | 2027/28 tax year |
| Personal Allowance and employee NI | £12,570; employee NI 8% from £12,570 to £50,270, 2% above | Unchanged except the Lower Earnings Limit: Personal Allowance £12,570; employee NI 8% from £242 to £967 a week, 2% above. The Lower Earnings Limit rises to £133 a week | 2027/28 tax year. The NI figures will be set by secondary legislation in early 2027 |
| National Living Wage | £12.71 an hour at 21 and over, from 1 April 2026 | £13.21 an hour at 21 and over | 1 April 2027 |
| Payrolling benefits in kind | Not in force yet. Phase 1 starts 6 April 2027 | Dates confirmed, to be legislated in Finance Bill 2026-27. We could not find the final phase 1 guidance | 6 April 2027 for cars, vans, fuel and medical benefits; 6 April 2028 for most others |
| Pension salary sacrifice cap | Not in force yet. £2,000 a year from 6 April 2029 | No change found | 6 April 2029, as already announced |
Employer National Insurance and the thresholds
In 2026/27 employer NI is 15% on pay above the Secondary Threshold of £5,000 a year.
The Budget did not change either. The rates annex to the Overview of Tax Legislation and Rates (OOTLAR) shows the employer rate at 15% above the Secondary Threshold for 2027/28, and the threshold at £96 a week in both years. The OOTLAR says the National Insurance limits and thresholds, other than the Lower Earnings Limit and the self-employed Small Profits Threshold, stay at 2026/27 levels until the 2030 to 2031 tax year, as previously announced. The higher thresholds for employees under 21, apprentices under 25 and qualifying veterans (£967 a week) and for Freeports and Investment Zones (£481 a week) are also unchanged.
So if an employee's pay doesn't change, the employer NI on their pay doesn't either. Class 1A NI on benefits such as cars, vans and fuel can still rise: the van benefit charge and the car and van fuel benefit charges go up in line with September's Consumer Prices Index from 6 April 2027.
Employment Allowance
Eligible employers can take up to £10,500 a year off their employer NI bill in 2026/27.
No change to the amount: the OOTLAR rates annex shows £10,500 a year per eligible employer for 2027/28, the same as 2026/27. We found no change to who can claim it in the OOTLAR or the Budget document.
Income tax and employee National Insurance
These change your employees' take-home pay and tax codes rather than your own cost. In 2026/27 the Personal Allowance is £12,570, and employee NI is 8% from £12,570 to £50,270 and 2% above.
None of these change for 2027/28. The OOTLAR rates annex shows the Personal Allowance at £12,570, basic rate tax on the first £37,700 of taxable income and higher rate from £37,701 to £125,140, the same as 2026/27. These are the main rates, which apply in England, Wales and Northern Ireland. Scottish income tax rates and bands are set by the Scottish Parliament, not in these documents.
Employee NI stays at 8% on pay between the Primary Threshold of £242 a week and the Upper Earnings Limit of £967 a week, and 2% above that. The one figure that moves is the Lower Earnings Limit, which goes up from £129 to £133 a week (£6,916 a year) for 2027/28. The OOTLAR says the government will legislate for this through secondary legislation in early 2027.
Minimum wage rates for April 2027
The National Living Wage is £12.71 an hour for workers aged 21 and over from 1 April 2026. GOV.UK says the rates change on 1 April every year.
The Budget document sets the rates from 1 April 2027, and says the government accepted the Low Pay Commission's recommendations in full. Each rate goes up by 3.9%:
- National Living Wage (21 and over): £13.21 an hour
- 18 to 20 year olds: £11.27 an hour
- 16 and 17 year olds, and eligible apprentices: £8.31 an hour
- Accommodation offset: £11.53 a day
GOV.UK's minimum wage rates page now shows the same April 2027 rates.
Benefits in kind: payrolling from April 2027
Mandatory payrolling of benefits in kind starts with phase 1 on 6 April 2027 (company cars, car fuel, vans, van fuel and employer-provided medical benefits). HMRC said the final phase 1 guidance would be published to align with Autumn Budget 2026.
The OOTLAR confirms the dates and says the legislation will be in Finance Bill 2026-27. Employers will have to report and payroll most benefits in kind and taxable expenses through Real Time Information: company cars and vans, car and van fuel and medical benefits from 6 April 2027, and all other benefits in kind from 6 April 2028, except employment-related loans and employer-provided living accommodation.
We could not find the final phase 1 guidance among the documents published on GOV.UK when we checked on the afternoon of 28 October 2026.
Pension salary sacrifice
From 6 April 2029, salary sacrificed into a pension above £2,000 a year will be charged employee and employer NI. HMRC's policy paper says the design and operation of the limit will be set out in secondary legislation in due course.
We found no change to the cap, its start date or its design in the OOTLAR or the Budget document. The Budget document mentions the cap only as one of its earlier decisions.
Expenses, paying PAYE and other payroll points
Mileage. The tax-free rate of 55p a mile for the first 10,000 business miles in an employee's own car or van, which has applied since 6 April 2026, is now permanent. Above 10,000 miles the tax-free rate goes up from 25p to 35p a mile from 6 April 2027, by statutory instrument. For National Insurance, 55p a mile already applies to all business miles.
Paying PAYE by Direct Debit. From 6 April 2029 employers will have to set up a Direct Debit instruction for PAYE return liabilities, subject to defined exceptions. You can still pay by another method before a cut-off date; the Direct Debit collects anything left unpaid. The legislation will come in a future Finance Bill.
Statutory payments. We could not find 2027/28 rates for statutory payments, such as Statutory Sick Pay or Statutory Maternity Pay, in the Budget document or the OOTLAR.
Making Tax Digital. The Making Tax Digital changes in the documents are for Income Tax Self Assessment, not payroll. People joining in April 2027 won't get late submission penalty points for their quarterly updates in 2027/28.
If you employ people who come from or work outside the UK
Skilled Worker sponsorship fees. When an employer pays a certificate of sponsorship fee or the Immigration Skills Charge for a Skilled Worker, that payment will be exempt from income tax, so it isn't a taxable benefit for the employee. This applies to payments made on or after 28 October 2026, Budget day itself, and is to be legislated in Finance Bill 2026-27.
Direct Debit and overseas bank accounts. Respondents to the consultation on the Direct Debit rule pointed out that a business with an overseas bank account can't set up a Direct Debit. The government's response says this approach allows time for HMRC to work through with stakeholders what exemptions will be needed. It doesn't yet say how the rule will apply to an employer that pays from an account outside the UK.
Travel and subsistence in the UK. From 6 April 2028 the Benchmark Scale Rates, which employers use to reimburse travel and subsistence in the UK without checking receipts, change to £20 for travel over 5 hours, £60 for over 10 hours and £75 for over 24 hours. The OOTLAR says this will be made by secondary legislation.
Travel and subsistence abroad. From 6 April 2028 the Overseas Scale Rates, which employers use to reimburse overseas travel and subsistence without checking receipts, will be simplified, replacing the destination-specific rates with a tiered approach linked to the updated domestic Benchmark Scale Rates. HMRC is still finalising the rates destination by destination.
We found nothing in the OOTLAR or the Budget document on National Insurance for employees coming to or leaving the UK, or on how an overseas employer with no UK presence pays PAYE.
What to do in payroll, and when
The only payroll change we found that applies from Budget day is the sponsorship fee exemption above. Each change applies from the date it takes effect, so here are the dates in order.
| Date | What changes | What to do |
|---|---|---|
| 28 October 2026 | Certificate of sponsorship fees and the Immigration Skills Charge paid by the employer are exempt from income tax (to be legislated in Finance Bill 2026-27) | If you sponsor Skilled Workers, these payments will not be a taxable benefit for the employee |
| 1 April 2027 | New minimum wage rates: £13.21 an hour for the National Living Wage | Check every employee's pay against the new rates |
| 6 April 2027 | Phase 1 payrolling of benefits in kind (company cars and vans, car and van fuel, medical benefits). Mileage above 10,000 business miles goes to 35p a mile | Make sure your payroll can report these benefits through RTI. Update your mileage rate |
| 2027/28 tax year | Lower Earnings Limit goes up to £133 a week. Employer and employee NI rates, the other thresholds, the Personal Allowance and the main income tax bands stay the same | Check your payroll software uses the 2027/28 figures |
| 6 April 2028 | Most other benefits in kind move into payroll (not employment-related loans or living accommodation). New Benchmark Scale Rates for UK travel (£20, £60, £75), and Overseas Scale Rates are simplified | List the benefits you provide and plan to payroll them |
| 6 April 2029 | Pension salary sacrifice above £2,000 a year is charged employee and employer NI. PAYE needs a Direct Debit instruction in place | Review salary sacrifice arrangements, and set up the Direct Debit unless you are exempt |
Our employer compliance calendar keeps these dates next to the ones you already know.
Would you rather someone else applied the changes?
We run UK payroll for overseas employers and growing UK businesses, and apply new rates and thresholds from the date they take effect.
Get startedCommon questions
Did the 2026 Budget change employer National Insurance?
No. For 2027/28 the employer rate stays at 15% on pay above the Secondary Threshold of £96 a week, the same as 2026/27, and the Employment Allowance stays at £10,500 a year. Apart from the Lower Earnings Limit and the self-employed Small Profits Threshold, the OOTLAR says National Insurance limits and thresholds stay at 2026/27 levels until the 2030 to 2031 tax year.
When do the Budget changes reach payroll?
Each on its own date. The new minimum wage rates apply from 1 April 2027. The National Insurance and income tax figures are for the 2027/28 tax year. Company cars, vans, fuel and medical benefits go through payroll from 6 April 2027, and most other benefits in kind from 6 April 2028. Of these changes, only the income tax exemption for Skilled Worker sponsorship fees applies from Budget day, to payments made on or after 28 October 2026.
What is the National Living Wage from April 2027?
£13.21 an hour from 1 April 2027 for workers aged 21 and over, up from £12.71. The rate for 18 to 20 year olds goes up to £11.27, and the rate for 16 and 17 year olds and eligible apprentices to £8.31.
Read next
- The Autumn Budget: what employers should watch for (written before the Budget)
- UK payroll and tax rates and thresholds 2026/27
- Employer National Insurance explained
- What a UK employee really costs
- Benefits in kind and the P11D explained
- Salary sacrifice explained
General information for employers, not tax or legal advice. It was written on 28 October 2026 from the Budget documents published on GOV.UK that day. Measures can change before they become law, and each one applies from its own start date. Please check your own position before acting.