UK Autumn Budget 2025 headlines for small businesses

Many small businesses are still feeling the hit from last year’s Budget. Increases in national insurance and minimum wage led to hiring freezes for businesses that couldn’t carry the extra costs.

The build up to this Autumn Budget hasn’t given any more promising of an outlook. Headlines circulated around pensions, national minimum wage, and taxes on our beloved chocolate milkshakes. But the biggest of all came moments before the Chancellor took to the podium. The Office for Budget Responsibility, which usually publishes the Budget report following the announcement, accidentally released this on its website during Prime Minister’s Questions.

This released key details of the Budget for all to see, before the Chancellor could announce them. All the while, MPs sat in the House of Commons, passing around notes and phones to get a glimpse of what would be announced. Luckily, we’ve laid out all the announcements you need to be aware of as a small business owner below!

Key notes at a glance

·         Minimum wage is increasing higher than inflation in April 2026

·         Income tax and national insurance thresholds will be frozen until 2031

·         SMEs to get free training for under-25 apprenticeships

·         National insurance contributions will be taken from pension salary sacrifice above £2,000

National Minimum Wage 2026 rates increased

As part of a move to ease cost of living pressures, the Chancellor revealed a higher-than-inflation rise in the National Living Wage. It means that from April 2026, the new rates will be £12.71 for people aged 21 and over, up 4.1%, and £10.85 for 18 to 20-year-olds, up 8.5%. Rates for under 18s and apprentices are rising to £8 an hour, a 6% increase.  

This all adds to business costs. And we know from the last Budget, businesses can react in a number of ways: reduce hiring, give lower pay rises to workers or raise prices for their customers.

Managing these annual increases manually introduces risk. An automated payroll software solution or a fully managed service can take the hassle and compliance burden off your hands, ensuring rates are applied correctly from day one.

Income tax thresholds frozen

The Chancellor announced that income tax thresholds will be frozen at the current rate until 2031. Rates have remained stagnant since 2021, when the pandemic first forced the freeze. National insurance thresholds will also be frozen.

This is seen as an effective ‘stealth tax’ and those on salaries close to the thresholds are likely to be affected. Around a million people who currently earn below the personal allowance of £12,570 could be drawn into paying tax when their income goes above the threshold.

While this is an employee tax issue rather than an employer one, the 'fiscal drag' effect can impact morale. Proactively communicating these changes to clarify any pension options or benefits can help manage staff expectations and questions.

National insurance contributions on salary sacrifice pensions

One big change that is likely to impact some employers and employees alike: pension contributions made by salary sacrifice will be subject to national insurance contributions above £2,000.

This change is expected to come into effect in 2029. Currently, employers and employees can benefit from NI savings when salary is exchanged for pension contributions.

If your business contributes to staff pensions via salary sacrifice, there could be an impact on your payroll. On top of the direct national insurance costs, employers could also face additional admin: reconfiguring payroll systems, renegotiating pension arrangements and communicating changes to staff.

Free training for apprentices under-25 for SMEs

The Chancellor announced apprenticeship training costs for under-25s will be free for small and medium-sized businesses. This is part of an effort to tackle youth inactivity.

It comes as part of an £820m package of funding that will offer support and opportunity for young people.  

Top tips for small businesses navigating the Autumn Budget 2025

Get familiar with the changes that will impact you and your employees

Review current payroll systems and budgets now to ensure compliance by April 2026. And make sure to proactively communicate these changes to management and affected staff.

Seek expert support from qualified experts to help understand the steps you need to take to remain compliant and minimise costs.   

Get your HR and payroll in line

With changes that will impact how you pay your staff, it’s important you have the right processes in place. You want to minimise any additional costs and cut out unnecessary admin work.

If payroll is something you manage yourself, you could be hit with additional costs. And mistakes are easy to make, especially when changes come into effect. Don’t put your business at risk of costly penalties from HMRC. Choose an integrated payroll and HR solution, with full support from CIPP-qualified experts.  

BrightHR Payroll helps you stay compliant by automatically accounting for statutory rates of tax and pay rates, combining your HR and payroll processes to maintain a single source of truth and minimise time spent on admin.  

Need more support navigating the Autumn Budget 2025?

There’s no doubt this has been an eventful Budget. But navigating these changes shouldn't be a headache. Ensure your business stays compliant and efficient with a system built for busy small businesses.

Discover how BrightHR simplifies payroll and HR compliance today.