HR Hub

Freezing tax thresholds, changing the rules on pension salary sacrifice, and increases to the National Minimum Wage headline the 2025 Budget, as it pertains to HR.

• Tax thresholds - income tax thresholds and the equivalent NICs thresholds for employees and the self-employed will be kept at their current levels for a further three years from April 2028 to April 2031.
• Salary sacrifice - employer and employee NICs will, from 6 April 2029, be charged on pension contributions above £2,000 per annum made via salary sacrifice. Any contribution above £2,000 will be subject to both employee and employer NICs. Read more.
• NMW and NLW - from 1 April 2026, the National Living Wage will increase by 4.1% to £12.71 per hour for eligible workers aged 21 and over. Read more.
• Apprenticeships - SMEs will be eligible for free apprenticeship funding for workers under the age of 25.
• Illegal working - a dedicated ‘hidden economy’ team within the new Fair Work Agency will be established to take action in sectors known to have egregious breaches of employment rights legislation alongside illegal working and tax issues.
• Employer NICs relief for veterans - employer NICs relief for those hiring veterans in their first civilian role will be extended to April 2028.
• Homeworking - tax relief for employees’ self-funded homeworking costs will end on 6 April 2026.
• Workplace benefits relief - the income tax and NIC exemption for employer-provided benefits will be extended, from 6 April 2026, to cover reimbursements for eye tests, home working equipment, and flu vaccinations.