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What's new?

The Autumn Budget

The Autumn Budget brought several announcements that will have a direct impact on payroll operations over the next few years. We’ve summarised what’s changing here.

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ROI's MyFutureFund

Ireland is preparing for a major change to workplace pensions with the launch of MyFutureFund, the country’s new auto-enrolment pension scheme, set to commence in January 2026.

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New Advisory Electric rates

HMRC introduced two separate Advisory Electric Rates (AERs) for company car drivers: one for home charging and one for public. Find out what this means for you here.

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Want the new rates?

You can find all the 2026 – 27 payroll rates announced in this years' budget inside your Payroll Supplies.

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The Autumn Budget 2025

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Changes to electric vehicles

The government will introduce a mileage-based charge on electric vehicles from April 2028, in addition to existing VED. Battery electric cars will pay £0.03 per mile and plug-in hybrids £0.015 per mile, with rates rising annually in line with CPI.

For example, a driver covering 8,500 miles in 2028 – 29 would pay around £255, roughly half the fuel duty cost per mile for petrol or diesel vehicles.

PHEV benefits in kind easement

The government will introduce a temporary benefit in kind tax easement for plug-in hybrid electric vehicles (PHEVs) in the benefit in kind system to prevent their tax charge increasing significantly due to new emissions standards. This easement will be in place from 1 January 2026 – 5 April 2028.

Pension salary sacrifice

Salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from NICs from April 2029. Ordinary employer pension contributions will remain exempt.

This change raises practical questions that HMRC has not yet clarified, including how the cap will interact with relief-at-source schemes, statutory leave rules and existing salary sacrifice legislation. Employers should expect increased employee queries once more detail is published.

Tax and fiscal drag

The following thresholds remain frozen until 2030 – 31:

Personal allowance: £12,570
Higher-rate threshold: £50,270
Additional-rate threshold: £125,140

This means more employees will gradually move into higher tax bands as wages rise – a key driver of fiscal drag.

Primary, secondary and upper NIC thresholds are also frozen until 2030 – 31.
This includes the already-reduced secondary threshold of £5,000.

The government will also uprate the Married Couple’s Allowance and the Blind Person’s Allowance by the September 2025 CPI rate of 3.8%. This will be legislated for through a Treasury Order and take effect from 6 April 2026.

Student loans

The Plan 2 repayment threshold will increase in April 2026 and then be frozen at £29,385 for three years from April 2027.

National Insurance updates

From 2026 – 27, the following figures will be increased in line with the September 2025 CPI rate (3.8%):

Lower Earnings Limit (LEL): £129 per week
Small Profits Threshold: £7,105 per year

Class 2 and Class 3 voluntary NIC rates will also rise in line with CPI.

National Minimum Wage

From April 2026, the National Living Wage (NLW) is to increase by 4.1% to £12.71 per hour from April 2026.

The National Minimum Wage (NMW) for 18 to 20-year-olds will rise from £10.00 to £10.85 – an increase of 8.5%.

The Low Pay Commission has also set out a path for the NLW – currently applicable for people aged 21 and over – to be extended to 20 year olds in 2027, and to 18 and 19 year olds in 2028 or 2029, subject to economic conditions and government policy at the time.

16 – 17 years olds will get £8, and Apprenticeships £8. Accommodation offset increases to £11.10.

Want a clear view of the new rates?

You can find all the 2026 – 27 payroll rates announced in this years' budget inside your Payroll Supplies.

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The Autumn Budget 2025 introduces a range of measures that will affect payroll, tax, and employment costs in the years ahead.

With several policy updates taking effect, employers will need to stay informed and prepared for the changes ahead.

This overview brings the key points together in one place, helping you understand what’s changing, when it takes effect, and how it may impact your organisation.

You can read the official Budget here.

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Other notable updates

Homeworking tax relief removed

From April 2026, employees will no longer be able to claim the homeworking tax relief via their tax code. HMRC is withdrawing the allowance due to widespread non-compliance.

New exemption for reimbursed costs

Employer reimbursements for:

homeworking equipment
eye tests
flu jabs

will become tax and NIC exempt when processed through payroll. This ensures consistency with situations where employers provide equipment directly.

Investment zones and freeports

New zones have been approved in Flintshire, Wrexham, Anglesey and Forth Green, with further developments in Northern Ireland. NIC relief will apply once legislation is finalised.

Fair Work Agency enforcement

Launching in April 2026, the new agency will:

follow up every worker complaint
work closely with unions and business groups
run more frequent “naming” rounds
target individuals behind repeated employment rights breaches

This represents a significant expansion of enforcement.

Finance Bill

Employee car ownership schemes (ECOS): changes treating ECOS as a benefit-in-kind have been postponed until 2031.
Construction Industry Scheme (CIS): HMRC will begin work on tackling CIS fraud and consulting on simplification.

Want more of the detail?

Watch our Smart Talk for a full breakdown of the changes announced in the Budget and what they mean for your organisation.

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New split rates for electric vehicles

The new rates are:

8p per mile for home charging
14p per mile for public charging

Until September, electric vehicles had just one flat rate.

The split recognises the growing number of electric company cars on the road and the higher cost of public charging compared with charging at home.

If employees use both charging methods, HMRC expects employers to apply a reasonable method of apportionment.

Employers can also reimburse above the advisory rates if they can show that fuel costs per mile are higher, for example when using ultra-fast chargers.

Petrol, diesel and LPG vehicles continue to have three rates based on engine size.

To stay compliant, you should:

Update travel and reimbursement policies to reflect the new split rates
Clearly define business mileage
Provide guidance on recording home and public charging costs

HMRC has not yet issued detailed guidance on applying the new rates, so clear record-keeping and fair apportionment methods remain essential in the meantime.

From 1 September 2025, HMRC introduced two Advisory Electric Rates (AERs) for company car drivers: one for home charging and one for public.

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Dismissal and Re-engagement

The Statutory Code of
Practice on Dismissal and Re-engagement, known as ‘fire and rehire,’ has been in force since 18 July 2024.

Dismissal and re-engagement is the practice of forcibly changing terms and conditions by dismissing the employee and re-engaging them on the new terms.

While the Employment Rights Bill aims to strengthen the rules by making it “automatically unfair” unless the employer can demonstrate no alternative, the current provisions remain in place.

The code sets out the principles it expects employers to follow and encourages a greater level of consultation. It also states that when issuing the new terms to an employee, the only terms that should be

changed are those which the employee has been consulted about. No other changes should be made.

From 20 January 2025, employers have been required to adhere to the Code, in addition to existing consultation requirements, for redundancies involving 20 or more dismissals.

Employment tribunals can apply an uplift of up to 25% to an employee’s compensation if an employer unreasonably fails to comply with the Code where it applies.

Consultation on the code commenced on 2 December 2024, and the outcome was published in March 2025. It resulted in a decision to increase the maximum protective award for collective redundancy from 90 to 180 days' pay, but not to introduce interim relief as a remedy.

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Social Care Fair Pay

A major shake-up is on the way for pay and conditions in the social care sector.

In a move a set to bring sector-wide negotiations on pay and working conditions for the first time, the government has announced plans to introduce Fair Pay Agreements (FPAs) through the upcoming Employment Rights Bill.

Why is this happening?

Social care plays a vital role in our communities, employing over 1.59 million people in England alone. But despite the essential nature of the work, the sector has long faced challenges such as low pay, high turnover, recruitment pressures and limited bargaining power.

These factors contribute to ongoing recruitment and retention difficulties, which in turn put pressure on care services.

And with demand for social care predicted to rise sharply as the UK’s population ages (the over-85 population alone is expected to grow by 1.4 million by 2045), change is essential.

What will Fair Pay Agreements do?

FPAs are a form of sectoral collective bargaining. They’ll bring together employers, worker representatives (including trade unions), and other stakeholders to negotiate on pay and other employment terms.

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The powers in the Employment Rights Bill will allow governments to:

Set up a Social Care Negotiating Body for each nation.
Appoint members and define the body’s remit.
Specify the negotiation process, including how disputes will be resolved.
Ratify agreements so that the terms become legally binding across the sector.

How will it work in practice?

The Department of Health and Social Care (DHSC) has already begun engaging with sector representatives through a Fair Pay Agreement working group, alongside specialist task groups.

Their input will shape a public consultation later this year, after the Bill receives Royal Assent.

Once the negotiation bodies are established, they’ll work to agree the first FPA. The government aims for the first agreement for adult social care in England to take effect within this parliament.

FPAs represent a major step towards tackling the pay and retention crisis in social care.

By giving workers and employers a stronger voice in setting sector-wide pay and conditions, the government hopes to build a more stable and sustainable workforce for the future.

What happens next?

2025 Employment Rights Bill expected to receive Royal Assent.
Post-Royal Assent public consultation on the FPA process.
Secondary legislation to establish the negotiating bodies.
First agreements negotiated aiming for implementation before the end of the current Parliament.

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ERB Trade Union reforms

The Employment Rights Bill introduces sweeping changes to trade union laws, repealing restrictive legislation and strengthening protections for workers who take part in industrial action.

These proposals are designed to simplify union processes and expand rights for representatives. If passed, the reforms will represent the most significant overhaul of union law in decades. Employers will need to adapt policies, processes and training to remain compliant.

Here's all the key proposals you need to be aware of.

1. Repeal of restrictive legislation

The Trade Union Act 2016 and Strikes (Minimum Service Levels) Act 2023 will be repealed and ballot thresholds will be lowered: unions will only need a simple majority of those voting, without the previous 40% support requirement in key public services.
Certain reporting and picketing obligations will be removed, reducing administrative burdens.
Secure electronic balloting for statutory union ballots will be introduced.

2. Facility time and access

Strengthened rights for representatives to reasonable paid time off, with a presumption that the employee’s view of ‘reasonable’ is valid unless the employer can prove otherwise.

Access to workplace facilities (office space, internet, intranet) must be provided where reasonable, with guidance from an ACAS Code of Practice.
New statutory rights for trade union equality representatives to take time off for promoting and supporting workplace equality.

3. Blacklisting protections

Expanded to cover lists generated by AI or compiled by third parties. Protections will apply even if lists weren’t originally created for discriminatory purposes.

4. Industrial action safeguards

Workers will be protected from dismissal regardless of strike duration. Employers wishing to dismiss employees during long-running industrial action must demonstrate the dismissal was unrelated to the action.

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Additional consultation will determine what counts as unlawful detriment.

5. Union access rights

A new framework for workplace access requests will be introduced, with disputes managed by the Central Arbitration Committee (CAC).
Employers must not unreasonably deny access, including digital access through intranet or online platforms. Enforcement will include penalties tied to company turnover for repeated non-compliance.

6. Statement of union rights

Employers must provide all workers with a written statement informing them of their right to join a union, alongside existing employment particulars.

7. Simplified recognition process

Threshold for recognition applications lowered: unions need only show 10% membership in a bargaining unit, with Ministers empowered to reduce this to 2% via secondary legislation.
Recognition ballots will require only a simple majority of those voting.
New measures prevent employers from inflating bargaining units to weaken union support.
Streamlined complaints process for unfair practices during recognition.

8. Political funds

Unions will no longer need to hold 10-yearly ballots to maintain political funds.
New members will be automatically opted in, with the right to opt out at any time.

9. Simplified ballot and action notices

Reduced reporting requirements for unions when giving notice of ballots and industrial action.
Employers will still be informed of categories of workers, workplaces affected, and total numbers, but detailed breakdowns will no longer be required.

Looking ahead

These reforms are designed to shift the balance of power towards workers and their representatives. Employers should start preparing now by reviewing policies, assessing training needs, and strengthening their approach to workplace consultation.

If you’d like to explore the proposed trade union reforms in more detail, you can read the full article here.

Who will be enrolled

Employees will be automatically enrolled if they:

Earn €20,000 or more per year (across all jobs)
Are aged between 23 and 60
Aren’t already contributing to a workplace pension

Those earning less than €20,000 can opt in through an online portal. Eligibility will be determined automatically using payroll data from Revenue.

How it will work

Both employees and employers will contribute to the scheme, along with a State top-up.

Starting at 1.5% each for employees and employers, rising gradually to 6% over ten years

ROI's MyFutureFund

Ireland is preparing for a major change to workplace pensions with the launch of MyFutureFund, the country’s new auto-enrolment pension scheme, set to commence in January 2026.

The scheme is designed to close gaps in pension coverage and strengthen long-term financial security for workers.

It will be administered by the National Automatic Enrolment Retirement Savings Authority (NAERSA), which will oversee all operations and reduce the administrative burden for employers.

The State adds 0.5% on top
Contributions will be based on gross pay, capped at €80,000 per year

Each employee’s savings will be held in a personal pot that moves with them if they change jobs. Investments will be managed by firms such as Irish Life, Amundi and Blackrock, offering a range of risk options.

Opting out and suspensions

Employees will be able to opt out between months 7 and 8 after joining or during rate increases, and can suspend contributions after six months.

Opt-outs trigger refunds of employee contributions,while employer and State payments remain invested.

Employer responsibilities

Employers won’t be required to determine who qualifies, as NAERSA will manage eligibility.

However, they will need to:

Use payroll software to apply auto-enrolment notifications
Notify staff when they’re enrolled
Pay contributions on the same day as wages

Penalties will apply for non-compliance or for attempting to influence employee participation.

What it means for employers

For most businesses, MyFutureFund should be straightforward to manage once payroll systems are updated. The phased contribution model allows employers to plan financially, while NAERSA’s centralised systems aim to reduce administration.

MyFutureFund will not replace the State Pension but will ensure every worker in Ireland has access to a secure, portable retirement savings plan.

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Employment rights reform in Northern Ireland

In 2024, a consultation was launched on a new Employment Rights Bill designed to promote ‘good jobs’ across Northern Ireland.

Responses came from a wide range of employers, unions and other stakeholders, and the Department for the Economy has now confirmed the areas it plans to take forward. The proposals will go before the Northern Ireland Executive, with the aim of introducing a bill to the Assembly in early 2026. If approved, new measures will be rolled out on a phased basis, with the first changes expected from April 2027.

1. Fairer contracts

Banded hours contracts for zero-hours workers who regularly exceed their contracted hours.
Compensation where shifts are cancelled at short notice.
A ban on exclusivity clauses in contracts that don’t guarantee income above the Lower Earnings Limit.

2. Stronger protections

Safeguards against dismissal through ‘Fire and Rehire’ practices, unless employers can prove genuine financial necessity.
Personal liability for employers who fail to notify the department of large-scale redundancies.
Written terms of employment provided to all workers on or before day one.

3. Agency worker rights

Abolition of ‘pay between assignment’ contracts.
A requirement for agencies to provide Key Information Documents to workers.

4. Pay and benefits

Itemised payslips extended to all workers, not just employees.
Holiday pay calculations aligned with Great Britain, moving to a 52-week reference period.
Transparent distribution of tips, with statutory record-keeping and a new Code of Practice.
Support for real living wage adoption through accreditation schemes and a new statutory ‘right to disconnect’ code of practice.

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5. Work–life balance

Flexible working becomes a day-one right, with employees able to make two requests in 12 months.
New entitlements to carer’s leave, neonatal care leave, and enhanced paternity leave.
Extended redundancy protections for pregnant employees and new parents, lasting up to 18 months after birth or adoption.

6. Trade union access and representation

Lower thresholds for workplace recognition requests (from 21 members to 10).
Digital access rights for union representatives and electronic balloting for industrial action.

Greater promotion of collective bargaining, in line with EU minimum wage directives.
Removal of the 12-week limit on protections against dismissal for official strike action.

7. Transparency and consultation

Lower thresholds for Information and Consultation of Employees (ICE) agreements, with requests possible from as few as 10 workers or 2% of staff.
New reporting obligations for whistleblowing bodies (‘prescribed persons’).

What employers need to know

If passed, these reforms will bring employment law in Northern Ireland much closer in line with recent and upcoming changes in Great Britain.

Policies, contracts, and payroll systems will need reviewing and updating well ahead of implementation. While the exact timetable is still subject to Assembly approval, the first changes could take effect in 2027.

If you’d like to learn more about these reforms and what they could mean for employers, you can read the full article here.

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Changes to zero hour contracts

Zero hours contracts have always offered flexibility. But without the right safeguards, they can often leave workers carrying too much of the risk.

That’s why the government is introducing new rights to make work more predictable, fair and secure. The goal is to end ‘one-sided flexibility’. That means giving workers more security over:

The hours they work
The notice they receive for shifts
What happens if shifts are cancelled

These new rights won’t remove flexibility altogether. In fact, workers can choose to stay on a zero hours contract if that suits them, but the default will be shifting towards more predictability. Here's what's changing.

Right to request guaranteed hours

Eligible workers will have to be offered a guaranteed hours contract that reflects the average hours worked over a legislatively defined period.

This is currently expected to be the previous 12 weeks of work. Employers must offer this, but workers can decline and remain on their current arrangement if they prefer.

Right to reasonable notice of shifts

Employers will need to give workers reasonable notice of upcoming shifts. If notice is too short, workers will be able to raise a tribunal claim.

The government will set out what counts as ‘reasonable’, but each case will be considered based on its circumstances.

Right to compensation for cancelled or changed shifts

If a shift is cancelled, shortened or moved at short notice, workers must be compensated.

Again, the exact definitions of ‘short notice’ will be set in upcoming regulations, but the sentiment is that financial risk shouldn’t fall on the worker.

What about agency workers?

The rules will apply slightly differently for agency staff, but key protections will still stand:

Either the agency or the hirer must offer guaranteed hours, the hirer will be obliged by default, but there will be flexibility in certain scenarios
Both are responsible for giving reasonable notice of shifts.

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If shifts are cancelled at short notice, the agency will have to follow the same rules as the employer and compensate the employee.
The Government will consult further on how this works in practice.

Will zero hours contracts still be allowed?

Zero hours contracts aren’t going anywhere. It remains an attractive option for many, especially for those who value flexibility, such as students or carers. Workers can still opt to remain on a zero hours contract.

These reforms are about creating a fairer baseline, not removing flexibility altogether.

What’s next?

The Government will now consult on how to implement these measures. Final regulations will confirm:

What counts as ‘reasonable’ notice.
What compensation looks like for cancelled shifts.
How rights apply across different industries.

The changes are part of the new Employment Rights Bill, but they won’t come into effect until late 2027 according to the governments recently published Employment Rights Bill roadmap.

We’ll keep you updated as things progress and let you know when you need to take action.

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Small pension pots consolidator

Millions of workers juggle multiple small pension pots, often forgotten as they move between jobs, racking up flat-rate fees and making it hard to track retirement savings.

The Department for Work and Pensions’ new Small Pensions Pot Consolidator will automatically merge pots worth £1,000 or less into a single, ‘high performing’ scheme certified to deliver value.

This reform is expected to raise the average saver’s pot by around £1,000 over time and slash industry administration costs by roughly £225 million a year.

There is no confirmed implementation date yet. Now that the Pension Schemes Bill has Royal Assent, the government plans to consult with the industry and shape the necessary regulations in 2026.

What you need to know

Some measures are expected to come into effect in 2027 – 2028, with full implementation likely from 2030.
Schemes will no longer handle dozens of tiny deferred pots; instead, they’ll transfer them en masse to approved hosts.
A timeline for implementation has not yet been confirmed, but the amendment will be considered at the Report Stage in the House of Commons.
This will be a major shift in the way employers across the EU will attract and retain talent, and the UK isn’t immune.

Why this matters in payroll

While pensions sit outside standard payroll processing, streamlined small-pot consolidation can reduce queries at year-end and improve employee engagement with their retirement benefits.

Payroll professionals should coordinate with HR and pensions teams to ensure seamless data flows and clear communications.

For full details on how the Small Pots Consolidator works and what steps to take, see the DWP’s press release here.

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Roadmap for workplace pension reforms published

The government has published a new paper setting out a 10-year roadmap for workplace pensions, aimed at strengthening retirement savings and ensuring long-term sustainability of the system.

This strategy brings together previous consultation proposals into a single plan to guide reforms over the coming decade.

The government has emphasised that these reforms are designed not only to ensure adequacy of retirement savings, but also to enhance fairness and trust in the pensions system. Employers will need to keep up to date with the legislative changes as they are phased in over the next decade, and employees are being encouraged to actively engage with their pension savings.

The roadmap sets out several key priorities:

Priority	Proposal
Expansion of auto-enrolment	Lowering the minimum age threshold so younger workers are automatically enrolled. Removing the lower earnings limit so that pension contributions are made from the first pound of earnings. Encouraging higher levels of saving among part-time and low-income workers.
Improving retirement options	Simplifying the range of retirement products available so individuals can more easily make informed decisions. Encouraging the development of “decumulation pathways” to help people convert their pension savings into a sustainable income in retirement. Increasing access to guidance and financial advice at key decision points.
Defined Benefit (DB) pension schemes	Reviewing how DB schemes are regulated to ensure they remain secure and well-funded. Exploring options for scheme consolidation to improve efficiency and reduce costs. Strengthening protections for members where schemes are under financial pressure.
Defined Contribution (DC) pensions	Introducing tougher value-for-money requirements on pension providers. Benchmarking investment performance, costs, and charges to drive better outcomes for members. Encouraging greater use of “collective defined contribution” (CDC) schemes as an alternative model.
Boosting public confidence in pensions	Supporting the roll-out of the Pensions Dashboard, which will allow individuals to view all their pension savings in one place. Promoting transparency on fees, charges, and investment performance. Improving communications to make pensions simpler and easier to understand.