The UK Autumn Budget 2025 has introduced several new measures that will take effect over the coming years. To help HR and payroll professionals navigate these updates, we sat down with Nick Clarke, Director of Product Management, and Cybill Watkins, Product Legislation Manager, to discuss what these changes mean for employers and employees.
Watch our Budget 2025 analysis with Nick and Cybill:
Topics covered:
- [03:05] What the new EV mileage changes could mean for organisations and policy decisions
- [09:16] The impact of the £2,000 salary sacrifice cap on pensions, take-home pay, and wellbeing
- [22:18] The importance of financial wellbeing in the workplace
- [22:58] The frozen tax threshold effect
- [26:15] How NLW/NMW increases may affect pay brackets, queries, and workforce planning
- [30:56] Additional updates
Electric vehicle mileage payments
From April 2028, drivers of electric cars will pay a road charge of 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile. Although the policy is clear on rates, there is still uncertainty around how these charges will be applied in practice.
For example, company cars present a challenge – how can employers accurately distinguish between business and personal mileage? Without clear guidance, reconciling work versus private use could lead to errors or even fraud.
While employers have time to prepare, the finer details need to be nailed down.
Salary sacrifice pension contributions
“Salary sacrifice pension contributions per person will be capped per year to £2,000. Anything after that will then attract employee and employer National Insurance.” – Cybill Watkins, Product Legislation Manager
As Cybill explains, this change could have a significant impact on retirement planning. Employees who regularly contribute more – either to boost their long-term savings or during months when they have extra disposable income – will see a reduction in their take-home pay. Employers, in turn, will need to consider how this affects their benefits strategy and overall support for financial wellbeing.
“On the employer-employee relationship, we’re seeing a huge increasing trend to bolster employee financial wellbeing, helping employees manage money better, do more with less, and make sound choices.” – Nick Clarke, Director of Product Management
If you’d like to learn more about the importance of financial wellbeing in the workplace – and the tools and education to support it – check out our 2025 Financial Fitness report.
National Minimum Wage and National Living Wage increases
From April 2026, the National Living Wage (NLW) for over 21 year olds will increase by 50p an hour to £12.71, a 4.1% uplift. National Minimum Wage (NMW) for those aged 18 to 20 will see an increase to £10.85, an uplift of 8.5%. This could push some employees into new tax brackets, sparking questions about their pay.
“We are bringing AI into our products to help demystify the pay slip and understand and answer those questions” – Nick Clarke, Director of Product Management.
Final thoughts
It’s clear that HR and payroll professionals will play a leading role in guiding organisations through the 2025 Autumn Budget changes. While some measures, like EV mileage charges, are still a few years away, planning ahead will make the transition smoother.
The absence of major National Insurance (NI) increases offers welcome stability, allowing employers to refocus on growth and investment.
Now is the time to prepare – review your processes, communicate clearly with employees, and explore tools that will help you stay ahead of what’s next.
Plan ahead with confidence
Learn more about what the Autumn Budget means for your people.
