Keep a watchful eye if the Chancellor caps or scraps salary sacrifice for pensions, because the impact will be significant for both employers and employees.
If NIC exemptions are limited to £2,000 – employers lose a key cost-control tool, and both employees and employers face higher National Insurance contributions.
This could increase payroll complexity. SMEs should also watch for any further uplift in the National Minimum Wage.
If announced, it will mean higher wage bills and a compliance challenge for sectors like retail and hospitality. Salary sacrifice schemes must be reviewed to ensure employees don’t fall below the new minimum.
It will be interesting to see if the freeze on personal tax thresholds is extended to 2030. If so, fiscal drag (described as a stealth tax) might lead to more employees being pushed into higher tax bands, which could result in increased payroll complexity and generate more employee queries.
Any new compliance measures could add significant complexity to an already challenging landscape. Between potential Budget changes, upcoming Employment Rights Bill reforms, and the Fair Work Agency launch in 2026, HR and payroll teams need to plan ahead now. Waiting until April to prepare could expose employers to significant risk.
The Chancellor may also signal broader measures on employment costs – combing NIC changes and compliance reforms – creating a storm for businesses already under pressure.
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