What the Autumn Budget 2025 means for your business, HR, payroll and reward strategy

The Autumn Budget 2025 brings a set of changes that are likely to reshape how businesses manage pay, benefits and payroll. For employers and payroll providers, understanding and planning for these changes early will make a real difference.

What is changing and why it matters

The rules around pension salary sacrifice are set to change. From April 2029, contributions above two thousand pounds per year under salary sacrifice will attract National Insurance contributions for both employer and employee.

Income tax and National Insurance thresholds remain frozen. As salaries rise, more employees will be pushed into higher tax bands over time, increasing the overall tax burden.

The government has also confirmed an increase to the national minimum wage from next April. This will increase wage costs for many employers, particularly those with larger lower paid workforces.

In simple terms, salary alone becomes a less efficient tool for reward, and many employers will need to rethink how they structure pay and benefits.

What this means for employers, payroll and reward teams

Rising employment costs 
With changes to pension contributions and minimum wage levels, overall payroll costs are expected to increase. This may have a noticeable impact on margins and cash flow.

Reduced effectiveness of salary sacrifice and benefits schemes 
Some of the traditional tax advantages of salary sacrifice will reduce. Employers who rely heavily on these schemes may need to reassess their value.

Greater administrative complexity  
Payroll, HR and benefit systems will need updating to reflect the new rules. Payslips, reporting and employee communications will all need to be reviewed.

A renewed focus on reward strategy 
Employers may shift towards non salary rewards, flexible benefits and development opportunities as alternatives to pure pay increases.

What employers should be doing now

Review your current salary sacrifice arrangements, especially pension schemes, and assess future costs.

Re evaluate your total reward approach and consider a broader mix of benefits and incentives.

Update payroll systems and internal processes so they are ready for the changes.

Communicate clearly with employees so they understand how any changes may affect their take home pay or benefits.

Plan future budgets carefully and account for rising wage and contribution costs.

What this means for your payroll provider

These changes reinforce the growing importance of expert payroll and HR support. As payroll becomes more complex, businesses will increasingly rely on trusted partners to ensure compliance and accurate processing.

At Pecunia Pro, we support businesses through payroll change, reward redesign and compliance management, helping reduce risk and protect both employers and employees.