National Minimum Wage

From April 2026, the new National Minimum Wage will be:

  • £12.71 for over 21s – an increase of 50p per hour
  • £10.85 for workers between 18 and 20 – an increase of 85p per hour
  • £8 for apprentices and under 18s – an increase of 45p per hour

Salary sacrifice pensions

From April 2029, salary-sacrificed pension contributions above £2,000 will not be exempt from National Insurance. Instead, this will be treated as ordinary pension contributions tax-wise and, therefore, subject to employer and employee National Insurance contributions.

Income Tax and National Insurance thresholds

Income Tax and National Insurance thresholds will remain frozen at their current level until 2031.

Fuel Duty

The current 5p Fuel Duty will be extended until September 2026.

Electric vehicles

From April 2028, a mileage-based tax will apply for electric vehicles equal to 3p per mile for electric cars and 1.5p for plug-in hybrids.

Business rates

The Chancellor has said that she will “permanently lower tax rates” for more than 750,000 retail, hospitality and leisure properties.

Apprenticeships

Funding for under-25s apprenticeships will be free to small and medium-size enterprises (SMEs).

Soft Drinks Levy

The Soft Drinks Industry Levy applies to pre-packaged drinks with added sugar. This levy will be extended to cover more products, including sugary milk-based drinks like milkshakes, sweetened yoghurt drinks and ready-to-drink coffees.

Companies have until January 2028 to remove sugar from these products, or they will face the new charge.

Analysis

New National Minimum Wage rates will increase costs for businesses quickly. Changes to salary sacrifice pension contributions will increase costs from 2029.

To confront rising costs, businesses may:

  • need to reduce their head count – redundancies is an obvious way to do this, but it can also be achieved by hiring freezes and not back-filling roles when someone resigns
  • pass additional costs on to customers by raising their prices
  • try to lower their costs by, for example, renegotiating contracts and streamlining processes