The Autumn Budget was delivered on 28 October 2026. For employers, there were few changes to pensions and benefits. The minimum wage is going up, National Insurance rates and thresholds are unchanged, and the salary sacrifice cap planned for April 2029 remains in place.
Here’s a summary of what was announced and what’s still to come.
The Budget in brief for employers
- The National Living Wage rises to £13.21 an hour from April 2027
- Headline rates of National Insurance are unchanged
- The £2,000 cap on National Insurance relief for salary sacrifice pension contributions is still due from April 2029
- There are changes to how the State Pension is taxed and uprated, which may be relevant to employees approaching retirement
Wages and National Insurance
National Living Wage
According to the Low Pay Commission on GOV.UK, the National Living Wage for workers aged 21 and over will rise by 50p to £13.21 an hour, a 3.9% increase. The rate for 18 to 20 year olds rises to £11.27, and the rate for 16 and 17 year olds and apprentices rises to £8.31. The new rates apply from 1 April 2027.
National Insurance
The Budget 2026 document confirms there is no increase to the headline rates of Income Tax, National Insurance contributions or VAT. The thresholds at which employees start paying National Insurance were already set to stay at their current levels until 5 April 2031, as set out by HMRC.
The salary sacrifice cap is still coming in April 2029
The Budget document lists capping the amount of pension contributions that can be salary sacrificed (sometimes called salary exchange, it is the same thing) among the government’s existing decisions to tackle fast-growing tax reliefs. The cap announced last year therefore remains on track.
GOV.UK explains that salary sacrifice for pensions can continue after April 2029, and the first £2,000 of contributions per employee each year will remain exempt from National Insurance. Contributions above £2,000 can still be made through salary sacrifice, and all pension contributions remain exempt from Income Tax within the usual limits.
From 6 April 2029, any amount sacrificed above the £2,000 limit in a tax year will be subject to both employee and employer National Insurance, according to HMRC. HMRC also confirms that traditional employer pension contributions made outside salary sacrifice keep their National Insurance relief, and that everyone using salary sacrifice for pension contributions will still get some benefit from it. GOV.UK states that most employees making typical pension contributions, and their employers, will be unaffected. Our view is that this is unlikely to be the case in 2029.
For more detail, read our guide to how salary exchange is changing in April 2029, or our explainer on salary sacrifice vs non-salary sacrifice pensions. You can also see how salary exchange worked for one employer in our salary exchange case study.
What happens next
GOV.UK says further guidance on the salary sacrifice changes will be published before April 2029.
Other changes to be aware of
A new Pension Tax Allowance
The Budget introduces a Pension Tax Allowance, so that pensioners whose income is at or below the value of the full new State Pension won’t be brought into paying tax because of State Pension increases during this Parliament.
The triple lock
The government will adjust the Triple Lock from the next Parliament. Under the adjusted version, the State Pension will continue to rise every year and will track earnings over time.
Inheritance Tax on pensions
It was announced at the Autumn Budget 2024 that most unused pension funds and death benefits will come within the scope of Inheritance Tax from 6 April 2027. GOV.UK confirms that all death in service benefits paid from a registered pension scheme will be excluded from the value of an estate for Inheritance Tax purposes from that date. If you offer death in service cover, our guide to registered vs excepted group life schemes explains how the two types of scheme differ.
Mileage rates and parental pay
The Budget also permanently increases tax-free mileage rates for people who use their own vehicle for work, and expands parental pay, including to self-employed fathers and partners for the first time. Full details are set out in the Budget document. service
Changes to the State Pension and Inheritance Tax don’t change what employers have to do, but they may prompt questions from employees approaching retirement. Our future planning courses for employees over 50 help staff understand their options as they plan for retirement.
Frequently asked questions
Did the Autumn Budget 2026 change the salary sacrifice cap?
No. The cap is still due from 6 April 2029. From that date, only the first £2,000 a year of pension contributions made through salary sacrifice will be exempt from National Insurance.
Will employer pension contributions be subject to National Insurance?
Not if they’re made outside salary sacrifice. HMRC has confirmed that traditional employer pension contributions keep their National Insurance relief.
When does the new National Living Wage start?
The new rate of £13.21 an hour for workers aged 21 and over applies from 1 April 2027.
