With only a week to go until the Budget, our Payroll team have outlined the rumoured changes and what they could mean for your payroll.
1. Income Tax and National Insurance adjustments
What should I expect?
Rumours point towards tweaks to income tax bands and thresholds, alongside possible increases in employee NIC or higher rate rax adjustments.
Why this matters:
- It will affect employee take home pay
- You may see an increase in payroll queries after implementation
- It can influence staffing costs
What we will do:
We will apply any changes automatically once the details are confirmed and ensure compliance across your payroll.
2. Pension reform and salary sacrifice updates
There is a strong indication that the Government will adjust pension tax relief regulations including a potential cap on tax relief for salary sacrifice contributions.
Why this matters:
- May affect employers’ pension costs
- Could alter how benefit packages are structured
- Employees may suffer a tax increase
What we will do:
We will assess the impact for your workforce and apply any required adjustments to pension processing.
3. Potential tax increases affecting employment costs
Some targeted tax rises may be introduced that indirectly increase the cost of employing staff.
Why this matters:
- Employment costs could change mid year
- Will help businesses prepare for their 2026 budgets
4. National Minimum Wage and Living Wage increases
Budget announcements often confirm the new rates for April.
Why this matters:
- Impacts any hourly paid staff
- Can affect overtime, holiday pay and pension sacrifices
What we will do:
We will implement the new rates at the correct times and notify you of any impacts on your future payroll runs.
5. Compliance tightening and increased HMRC attention
Recent trends show stronger enforcement in areas such as:
- CIS (Construction Industry Scheme) submissions
- RTI (Real Time Information) errors
- Holiday pay calculations
- Auto-enrolment compliance
Budgets are often used to increase scrutiny and / or penalty changes.
Why this matters:
Small errors can become costly especially if unnoticed over multiple tax years.
What we will do:
Our new Payroll Health Check can identify hidden issues before HMRC does. Get in touch for more information.
