Pay

Strengthen Statutory Sick Pay

See Statutory Sick Pay for more details.

National Minimum Wage

Outside of the ERA 2025, the Government has promised to deliver a genuine living wage that accounts for the cost of living. It has changed the Low Pay Commission’s remit to factor in the cost of living when recommending minimum wage rates. It has also instructed the Low Pay Commission to narrow the gap between the minimum wage rate for 18-20 year-olds and the National Living Wage as a first step towards achieving a single adult rate.

The National Minimum Wage hourly rates increased again from 1 April 2026 as follows:

• National Living Wage (21 and older): from £12.21 to £12.71  
• National Minimum Wage (18 to 20 year olds): from £10.00 to £10.85  
• National Minimum Wage (16-17 year olds and apprentices): from £7.55 to £8.00 

The Chancellor announced a 3.9% increase to National Minimum Wage and National Living Wage in the 2026 Budget on 28 October 2026. These rates will apply from 1 April 2027:

• National Living Wage (21 and older): from £12.71 to £31.21 
• National Minimum Wage (18 to 20 year olds): from £10.85 to £11.27
• National Minimum Wage (16-17 year olds and apprentices): from £8.00 to £8.31.

Tax and National Insurance Contributions (‘NICs’)

Key changes in the 2024 Autumn Budget (on 30 October 2024) included:

• Income Tax and NIC personal allowance thresholds frozen until the 2028 deadline set by the Conservative Government.
• From April 2025, the rate of employer NICs was increased by 1.2 percentage points, from 13.8% to 15%.
• The Secondary Threshold – the per-employee threshold at which employers become liable to pay NICs on each employee’s salary was reduced from £9,100 per year to £5,000 per year from April 2025 until April 2028 and then will increase by CPI thereafter.
• The Employment Allowance also increased from £5,000 in April 2025 to £10,500 and was extended to all eligible employers by removing the £100,000 threshold for eligibility.

The Autumn Budget on 26 November 2025 did not increase headline rates of taxes to income tax, NICs or Value Added Tax. However, some headline changes included that:

• The Government maintained the freeze to income tax thresholds and the equivalent NICs thresholds for employees and self-employed individuals at their current levels for a further three years from April 2028 to April 2031.
• The Government also maintained the current NICs secondary threshold for employer contributions from April 2028 to April 2031.   
• From April 2029, only the first £2,000 of pension contributions made by an employee each year through a salary sacrifice scheme will be exempt from NICs, where currently there is not a cap. Employer and employee NICs (but not income tax) will be charged in the usual way on salary sacrificed pension contributions above the £2,000 annual cap.   

The Autumn Budget on 28 October 2026 again did not increase headline rates of taxes to income tax, NICs or Value Added Tax. However, some headline changes included that:

• The Government will increase the NICs lower earnings limit, small profits threshold and voluntary class 2 and class 3 rates by 3.5% for tax year 2027-28. The lower earning limit will be £6,916 a year and the small profits threshold will be £7,355 a year. The voluntary class 2 rate will be £3.80 a week and the class 3 rate will be £19.05 a week.
• The Government will launch an expanded “EMI2” to double the value of tax-advantaged options employees can hold from £60,000 to £120,000 from 6 April 2027.
• From April 2027, people above State Pension age with total income up to and including the value of the new State Pension will not pay Income Tax as a result of the Pension Tax Allowance.
• Reform to the Weekly Earnings Limit for carers in receipt of Carer’s Allowance, to be implemented during 2030-2031.
• Changes to make it easier for employees to claim tax relief on employment expenses through PAYE, from 6 April 2028, by removing the £2,500 income tax self-assessment expenses threshold.
• Plans to set out an implementation roadmap for requiring VAT e-invoicing from April 2029.

Increasing tax-free mileage rates for employees and self-employed people who use their own vehicles for work, of 55p per mile for the first 10,000 business miles and 35p per mile above 10,000 miles.

Internships and Apprenticeships

The Government has indicated it wants to ban unpaid internships, except when they are part of an education or training course. The Government launched a call for evidence on 17 July 2025, which considered unpaid internships and internships paid below the National Minimum Wage, unpaid work trials, voluntary work, volunteers and work shadowing. A response to this consultation was published on 27 February 2026, which summarised the findings which will help inform the Government’s next steps. In respect of unpaid internships, the Government has said it will 1) review and expand Government guidance; 2) use existing enforcement channels and the new Fair Work Agency to enforce non-compliance; and 3) bolster existing communications campaigns to help young people understand their rights.

The Government has announced it wants to make changes to the funding of apprenticeships in England. As part of the Autumn Budget 2025, The Government announced that it would provide a £1.5 billion investment over the following three years in employment and skills support, including providing £820 million worth of investment to fund a new Youth Guarantee (read our article here for more) and £725 million for the Growth and Skills Levy to help support apprenticeships for young people, including a change to fully fund SME apprenticeships for eligible people under 25.

In a written statement in December 2025, the Government outlined what the Youth Guarantee would comprise, including:

• A new Youth Guarantee Gateway to be introduced for young people on Universal Credit who are looking for work. Eligible individuals would be offered a dedicated session followed by four weeks of additional intensive support with a Work Coach
• New Youth Hubs to be established in over 360 locations to help young people access opportunities
• Creation of up to 150,000 additional work experience placements and up to 145,000 additional bespoke training opportunities designed in partnership with employers (‘Sector-based Work Academy Programmes’) with guaranteed job interviews
• Fully funded apprenticeship training costs to eligible 16-24 year olds by removing the need for non-levy paying employers to co-fund
• Expansion of foundation apprenticeships into sectors such as hospitality and retail
• A Jobs Guarantee scheme to provide six months of paid employment for long-term unemployed 18-21 year olds on Universal Credit

On 1 October 2026, the Government announced that smaller non-levy paying businesses will receive £2,000 for every new young apprentice they take on, subject to certain eligibility criteria. Businesses will not need to apply for the payment, and it will instead be passed onto them via their apprenticeship training provider.

The 2026 Budget on 28 October 2026 confirmed funding for the Youth Employment and Skills Package, which in Spring 2026 announced the £3,000 Youth Jobs Grant for businesses hiring eligible young unemployed people, an extension of the Jobs Guarantee for 22-24 year olds and a £2,000 apprenticeship hiring payment for new young apprentices taken on by non-levy paying employers. There will also be £100 million over two years to expand local apprenticeship services.

Tipping

New laws on tipping were introduced in October 2024, which regulate how employers allocate tips, gratuities and service charges among workers and eligible agency workers (see here for an article we wrote at the time). As part of this, employers are required to introduce a written tips policy where qualifying tips, gratuities, and service charges are paid on more than an occasional and exceptional basis.  

The ERA 2025 strengthens this by requiring employers to consult with either recognised trade union representatives or workers’ representatives or (where there are no representatives) workers directly affected by the policy before preparing a first draft tipping policy and when reviewing such policy. Any tips policy must also be reviewed every three years from first implementation. Employers will also be required to make an anonymised summary of the views expressed in the consultation available to all workers of the employer at the place of business where the tips policy applies.

A consultation was launched on 5 February 2026 seeking views on the new consultation requirements and review of tipping policies, including the steps that should be taken when consulting and any potential challenges that employers will face in consulting with workers. The consultation also requested feedback on the statutory Code of Practice on fair and transparent distribution of tips. The Government published its response to the consultation on 29 June 2026, along with an updated draft Code of Practice which was laid in Parliament. However, this was subsequently withdrawn following union criticism. On 19 August 2026, the Government launched a new consultation on a revised draft Code of Practice which was open until 29 September 2026.

As part of the annual increases to employment rates and limits, the limit on the compensatory award for failure to have a written tips policy, or for failure to allocate and pay tips fairly, increased from £5,135 to £5,366 on 6 April 2026.

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Timing and developments

Statutory sick pay

This measure took effect on April 2026.

Minimum wage

Rates increased on 1 April 2026 and will increase again on 1 April 2027.

Tax and NICs

Timings vary see above.

Unpaid internships and apprenticeships

Call for evidence launched on 17 July 2025 and closed on 9 October 2025 and its response was published on 27 February 2026.

Tipping

Included in the ERA 2025.

A consultation was launched on 5 February 2026, with the Government’s response published on 29 June 2026, along with an updated draft Code of Practice, although this was subsequently withdrawn. A new consultation was launched on 19 August 2026 on a revised draft Code of Practice, which was open until 29 September 2026.The consultation indicated that the final draft revised statutory Code of Practice is expected to be published later this year. However, the exact arrangements will be confirmed in due course. The Government’s updated timeline previously indicated that measures in respect of tipping would take effect by the end of 2026, however this was updated on 22 October 2026 indicating that the reforms are now expected to come into force on 1 January 2027.