UK: 2026 Budget Raises National Living Wage to £13.21

Chancellor John Healey delivered his first Autumn Budget on Wednesday 28 October 2026 — the first under PM Andy Burnham. The headline payroll measures: National Living Wage rises 3.9% to £13.21/hour from 1 April 2027; employer NIC stays at 15% with secondary threshold frozen at £5,000/year; income tax and NIC thresholds frozen until April 2031 (six-year extension of fiscal drag); Immigration Skills Charge and Certificate of Sponsorship fees paid by employer no longer taxable BIK from 28 October 2026.

Effective Date

• 28 October 2026 (immediate) to 6 April 2029 (phased)

Published

• HM Treasury — Autumn Budget 2026, 28 October 2026

Payroll action

• Update payroll systems to apply the revised National Living Wage and National Minimum Wage rates from 1 April 2027.
• Immediately update payroll Benefits in Kind (BIK) calculations to exclude employer-paid Immigration Skills Charge and Certificate of Sponsorship fees from 28 October 2026.
• Maintain the employer NIC rate at 15% and the secondary threshold at £5,000 for the 2027/28 tax year.
• Update mileage reimbursement policies and payroll calculations to reflect the revised AMAP rates effective 6 April 2027.
• Review salary structures for lower-paid employees ahead of April 2027 to address potential National Living Wage compression and ensure salary sacrifice arrangements do not reduce pay below National Minimum Wage requirements.
• Assess the employer cost impact of the National Living Wage increase, estimated at approximately £910 in additional annual gross wages per full-time worker, or around £1,046 including employer NIC.
• Prepare for the April 2028 removal of the £2,500 employment expenses threshold and assess the potential impact on PAYE administration.
• Continue preparations for the April 2029 implementation of the £2,000 cap on NIC savings from pension salary sacrifice arrangements.

HM Treasury — Autumn Budget 2026