In Brief: The National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027, the 18 to 20 rate rises to £11.27, and the 16 to 17 and apprentice rates rise to £8.31. The 55p tax-free mileage rate is now permanent, with the rate above 10,000 business miles rising from 25p to 35p. There’s no change to income tax or National Insurance rates, and thresholds stay frozen until April 2031.
Chancellor John Healey delivered his first Autumn Budget today, and for payroll teams it’s a fairly calm one. There were no rises to National Insurance (NI) rates and no new reporting rules. But there are still a few changes to plan for before April 2027.
To make things easier for you, we’ve pulled together everything that affects payroll and HR, what it means in practice, and what to do next.
Autumn Budget 2026 at a glance
| Area | What's changing | When |
|---|---|---|
| National Living Wage (21 and over) | Up 3.9%, from £12.71 to £13.21 an hour | 1 April 2027 |
| 18 to 20 rate | Up 3.9%, from £10.85 to £11.27 an hour | 1 April 2027 |
| 16 to 17 and apprentice rates | Up 3.9%, from £8.00 to £8.31 an hour | 1 April 2027 |
| Mileage (cars and vans) | 55p for the first 10,000 business miles made permanent; rate above 10,000 miles rises from 25p to 35p | 35p rate from 6 April 2027 |
| Income tax and employee NI | No rate changes; thresholds frozen until April 2031 | No change |
| Employer NI | Stays at 15% on earnings above £5,000 | No change |
| Pension tax allowance | No income tax for pensioners whose total income is no more than the full new State Pension | 6 April 2027 to 5 April 2030 |
A quick note: some of these measures still need to pass through Parliament in the Finance Bill, so details can change before they become law.
National Minimum Wage and National Living Wage from April 2027
For most employers, the national minimum wage is the headline. From 1 April 2027, the National Living Wage for workers aged 21 and over rises by 3.9%, from £12.71 to £13.21 an hour. The government has accepted the Low Pay Commission’s (LPC) recommendations in full, and around 2.3 million workers will get a pay rise.
The 18 to 20 rate also rises by 3.9%, from £10.85 to £11.27. That’s a real change of pace. Over the last few years, younger workers’ pay has risen much faster than the adult rate, as the government works towards a single adult wage. This time, both rates move together, so the gap won’t narrow in 2027. (For those keeping track, that means 20-year-olds won’t move onto the National Living Wage next April, as some had expected.)
The rates for 16 to 17-year-olds and apprentices rise by the same 3.9%, from £8.00 to £8.31 an hour, and the accommodation offset goes up from £11.10 to £11.53 a day.
For example, a retailer with 40 part-time staff aged 21 and over, each working 20 hours a week at the minimum, would see its wage bill rise by around £400 a week. That’s before employer National Insurance and pension contributions, which rise with it.
This is good news for lower-paid employees, but be aware that the Office for Budget Responsibility (OBR) expects inflation to peak at 3.8% early next year, so the real-terms gain will be modest.
What to do now:
- Budget for April: build the new rates into your 2027/28 pay forecasts, including the knock-on to employer National Insurance and pensions.
- Check salary sacrifice: a sacrifice can take someone’s pay below the new minimum in any pay period, even with their agreement.
- Review pay differentials: supervisors and team leaders paid just above the minimum may need a rise too, to keep your pay structure fair.
You’ll find the current rates and the most common compliance mistakes in our National Minimum Wage guide.
Get the latest insights and best practice guides, direct to your inbox.
Mileage rates: 55p is here to stay
The 55p mileage rate for the first 10,000 business miles in a car or van, introduced in May and backdated to 6 April 2026, is now permanent. And from 6 April 2027, the rate above 10,000 miles rises from 25p to 35p.
That’s welcome news for field-based teams and anyone who drives a lot for work, such as care workers, engineers and sales teams.
For example, an engineer who drives 14,000 business miles a year could be reimbursed £6,900 tax-free from April 2027 (10,000 miles at 55p plus 4,000 miles at 35p). That’s £400 more than under the current 25p rate.
Remember, these are the maximum tax-free rates, not a legal requirement. A lot of organisations still pay less than 55p, in which case employees can claim tax relief on the difference. Pay more, and the excess becomes taxable through payroll.
What to do now:
- Update your expense policy: add the 35p rate for miles above 10,000, effective from 6 April 2027.
- Update your systems: make sure your payroll and expense software can apply both rates correctly.
- Track cumulative mileage: you’ll need each employee’s running total of business miles in the tax year to know when the 35p rate kicks in.
For more detail, read our guide to the mileage rate increase.
Income tax and National Insurance: no rate changes
As expected, there’s no rise to the headline rates of income tax, employee National Insurance or value added tax (VAT). Employer National Insurance stays at 15% on earnings above £5,000 a year, and the Budget didn’t include any relief on employer costs either.
The Personal Allowance stays at £12,570, and the higher-rate threshold at £50,270. Both remain frozen until the end of the 2030/31 tax year, along with the matching National Insurance thresholds.
Stability is good news for payroll, but there’s a catch. With thresholds frozen and pay rising, more employees will drift into higher tax bands each year (often called fiscal drag). If you’re planning pay rises, some employees near the £50,270 threshold may notice less of the increase in their take-home pay than they expected, so it’s worth being ready for questions.
Pensions: a new allowance for State Pension income
The Chancellor announced a new pension tax allowance. From 6 April 2027 to 5 April 2030, pensioners whose total income is no more than the full new State Pension won’t pay income tax, even if it rises above the Personal Allowance. For those just above that level, the allowance is gradually withdrawn.
This mainly affects pensions payroll rather than your working employees, as most people still in work will have income above the limit. Keep an eye out for guidance from HM Revenue & Customs (HMRC) on how it’ll be applied.
The Budget didn’t revisit salary sacrifice. From 6 April 2029, only the first £2,000 a year of pension contributions made through salary sacrifice will be free of National Insurance. It’s still a couple of years away, but it’s worth identifying employees who sacrifice more than £2,000 now, so there are no surprises.
Get the latest HR updates, straight to your inbox
Get the latest HR insights and best practice guides, direct to your inbox.
Other announcements for HR teams
A few wider measures are worth knowing about:
- Non-compete clauses: these will be reformed so they don’t stop startups hiring or workers moving jobs.
- Union Learning Fund: it’s being re-established in England, with £15 million a year from 2027/28 to support workers’ learning and training.
- Visa salary requirements: these will be adjusted to better reflect labour markets across the UK.
- Self-employed parental pay: eligible self-employed fathers, partners and adopters in Great Britain will be able to get parental pay from April 2029.
Most of these are statements of intent, so expect consultations and more detail before anything changes in practice.
Changes already on the way
The Budget didn’t change the timetable for the big changes already coming. That means April 2027 is still a busy month:
- Mandatory payrolling of benefits in kind: company cars, car fuel, vans, van fuel, and medical and dental benefits must be payrolled from 6 April 2027. Our payrolling benefits guide covers what to do.
- Employment Rights Act 2025: reforms continue to roll out in phases, following the October 2026 changes.
- Salary sacrifice cap: National Insurance applies to pension salary sacrifice above £2,000 a year from 6 April 2029.
Each of these is manageable on its own, but a lot of organisations don’t realise how much lands in the same few weeks. Planning now means April won’t feel like a scramble.
What payroll and HR teams should do now
Here’s a simple checklist to work through over the next few months:
- Update your 2027/28 pay forecasts with the new minimum wage rates and their knock-on costs.
- Review salary sacrifice arrangements for anyone close to the minimum wage.
- Update your mileage policy for the 35p rate from 6 April 2027.
- Get ready for mandatory payrolling of phase one benefits, including monthly Class 1A payments.
- Tell your people what’s changing, especially employees on the minimum wage and regular business drivers.
Ready for April 2027?
Budgets bring a lot of moving parts, but you don’t have to handle them on your own. Cintra’s payroll software comes with all the statutory rates and thresholds you need as standard, and our team’s happy to talk through what today’s changes mean for your organisation.
If you’d like to see how it works, book a demo with our team to see how Cintra can help you in 2026/27 and beyond.
HR & Employment Law Guide
Grab your accessible summary of guidance and insights about where HR practices meet employment law.
Frequently asked questions
Q. What is the National Living Wage from April 2027?
A. From 1 April 2027, the National Living Wage for workers aged 21 and over rises by 3.9% to £13.21 an hour. The rate for 18 to 20-year-olds rises to £11.27, and the 16 to 17 and apprentice rates rise to £8.31.
Q. Has employer National Insurance changed in the Autumn Budget 2026?
A. No. Employer National Insurance stays at 15% on earnings above £5,000 a year, and there's no change to employee rates. Income tax and National Insurance thresholds stay frozen until April 2031.
Q. What are the HMRC mileage rates from April 2027?
A. The 55p rate for the first 10,000 business miles in a car or van is now permanent. From 6 April 2027, the rate for miles above 10,000 rises from 25p to 35p.
Q. Did the Budget change mandatory payrolling of benefits in kind?
A. No. Phase one still starts on 6 April 2027 for company cars, car fuel, vans, van fuel, and medical and dental benefits, with most other benefits following from 6 April 2028.
Q. When do the Autumn Budget 2026 payroll changes take effect?
A. The new minimum wage rates apply from 1 April 2027, and the new 35p mileage rate from 6 April 2027. The pension tax allowance runs from 6 April 2027 to 5 April 2030.
