Autumn Budget 2026: the confirmed payroll changes for employers

By Becky Cooper, founder of Buffalo Payroll (CIPP Foundation Degree in Payroll Management). Published 29 October 2026.

Chancellor John Healey delivered the Autumn Budget on Wednesday 28 October 2026. Two weeks ago we covered what employers should watch. These are the confirmed changes that affect payroll, mostly from April 2027.

Minimum wage rates from 1 April 2027

The government accepted the Low Pay Commission's recommendations in full, according to the Budget 2026 document. Every rate goes up by 3.9%. The final National Living Wage is just above the Commission's central estimate of £13.18.

Source: Low Pay Commission, minimum wage rates for 2027.

What it costs: for someone working 37.5 hours a week, the 50p rise adds £975 a year in gross pay. Employer National Insurance at 15% adds about £146 on top, and there may be more for workplace pension contributions. Our employer cost calculator shows the full cost of each employee.

Payroll pitfalls to plan for now

• Salary sacrifice: deductions can't take cash pay below the minimum wage, according to HMRC's salary sacrifice guidance. Staff close to £13.21 may need a capped deduction from April.
• Age bands: check dates of birth so staff turning 18 or 21 move to the right rate.
• Pay differentials: supervisors and room leaders paid just above the minimum may now be close to it, which is common in nurseries, care and hospitality.
• Unpaid time: uniforms, training and handovers can push average hourly pay under £13.21. Our minimum wage guide covers the common traps.

Tax and National Insurance

The government kept headline rates of income tax and National Insurance unchanged, according to the Budget document. The Budget documents announce no change to employer National Insurance or the Employment Allowance.

For 2027/28, the Class 1 Lower Earnings Limit rises to £6,916 a year (£133 a week). All other National Insurance limits and thresholds stay at 2026/27 levels until the 2030/31 tax year, according to the Overview of Tax Legislation and Rates (OOTLAR). The Lower Earnings Limit decides who builds up entitlement to statutory payments and the State Pension, so update it in payroll for April.

Mileage rates

The 55p rate for the first 10,000 business miles, backdated to 6 April 2026, is now permanent. From 6 April 2027, the rate for miles above 10,000 rises from 25p to 35p, and the National Insurance disregard rises with it, according to the OOTLAR. Our 55p mileage post explains how to correct 2026/27 payments.

Payrolling benefits in kind

The Budget confirmed that company cars, vans, fuel and medical benefits must be payrolled from 6 April 2027. Other benefits follow from 6 April 2028, except employment-related loans and employer-provided living accommodation. The legislation is due in Finance Bill 2026-27. Registration for voluntary payrolling of other benefits opens in November. See our registration post.

Other changes affecting payroll

• Employers' payments of certificate of sponsorship fees and the immigration skills charge are now exempt from income tax, for payments made on or after 28 October 2026.
• From April 2028, the £2,500 Self Assessment threshold for employment expenses goes, so more employees can claim relief through their PAYE tax code.
• From April 2029, employers will have to set up a Direct Debit for PAYE liabilities. Other payment methods can still be used before a cut-off date.
• A cap on pension contributions through salary sacrifice was mentioned, but the Budget document gives no figures or date.

Statutory sick pay, maternity and paternity pay rates for 2027/28 weren't in the Budget documents. We'll cover them when they're published.

This article is general information based on official sources at the date of publishing, not legal or tax advice. Rules can change, so check the linked guidance or talk to us about your payroll.