Budget 2026 for employers: a £13.21 minimum wage, benefits on the payroll and permanent mileage rates
The National Living Wage rises to £13.21 an hour, company cars and vans move onto the payroll, and mileage rates are made permanent. A checklist for the next two payroll years.
Most of the Budget’s changes for employers arrive in April 2027 and April 2028. Each one needs a change to payroll, contracts or expense policies, so it is worth planning now rather than in March.
A rise of 3.9%, worth £910 a year to a full-time worker.
Show the data
| From April 2026 | £12.71 |
|---|---|
| From April 2027 | £13.21 |
Minimum wage
From 1 April 2027, the National Minimum Wage rises to £11.27 an hour for 18 to 20-year-olds and to £8.31 for 16 and 17-year-olds and eligible apprentices. The accommodation offset rises to £11.53 a day.
Benefits in kind move onto the payroll
From April 2027, employers must report company cars, car fuel, vans, van fuel and medical benefits through payroll software and tax them in real time, instead of on a P11D after the year end. From April 2028, most other benefits follow, except employer-provided loans and accommodation.
Expenses and mileage
The tax-free mileage rates for employees and the self-employed who use their own car or van are permanently raised to 55p a mile for the first 10,000 miles and 35p a mile after that. From April 2028, benchmark scale rates for travel subsistence will be modernised, and the £2,500 threshold above which employees must use Self Assessment to claim expenses will be removed.
Share options
From 6 April 2027, the Company Share Option Plan limit doubles from £60,000 to £120,000 per employee, the scheme is renamed EMI2, and it can be used alongside the full Enterprise Management Incentive limit.
For the payroll calendar
- 1 Apr 2027New National Living Wage and National Minimum Wage rates
- 6 Apr 2027Payrolling of cars, vans, fuel and medical benefits; EMI2 (CSOP) limit of £120,000
- Apr 2028Most remaining benefits payrolled; new benchmark scale rates; £2,500 expenses threshold removed
- 6 Apr 2029Direct Debit required for PAYE liabilities
Sources
This insight is general information, not advice for your circumstances. Talk to us before acting on it.