Here at Advo, we wanted to share a few key points from the latest Budget that may be relevant to your business. 

Salary sacrifice Pensions.

Salary sacrifice allows employers to exchange part of their salary for pension contributions before tax and National Insurance contributions are applied.  This reduces NI contributions for both employee and employer.

For this to happen an employer needs to be operating a salary sacrifice pension scheme and there must be a contractual agreement with the employee

Although the cap of £2,000 will not be coming into law until 2029 it is worth noting that this will have an impact by increasing employers NI costs once implemented.

Tax and National Insurance

Tax and NI thresholds are to be frozen until 2020-31 with the personal allowance staying at £12,570.  As wages rise while thresholds stay fixed, more employees will:

• Move into taxable income.
• Pay higher tax and NI.
• Enter higher tax bands

Minimum wage rates from April 2026

On the eve of the budget, the Government announced the following changes to the national minimum wage rates from April 2026.

• National Living Wage increasing by 4.1% to £12.71 per hour.
• 18-20 year old rate increasing by 8.5% to £10.85 per hour
• 16-17 year old rate increasing by 6% to £8.00 per hour

As an employer you may need to plan for increased wage costs from April 2026.

Tax relief on homeworking expenses

Tax relief will be abolished on homeworking expenses if an employee claims directly from the Government effective April 2026.  Employers will still be able to reimburse for these expenses where eligible without a deduction of Income Tax and National Insurance contributions.

Plan 2 student loan threshold to be frozen

In the budget it was confirmed that the Plan 2 student loan repayment threshold will be frozen at £29,385 until 2029-30.

As always, our team of knowledgeable Payroll Advisors are on hand if you have questions.