If you employ people, April 2026 brings some evident challenges.
The minimum wage is going up again. That’s on top of the employer National Insurance increase you’ve already dealt with this year.
And to salt the wound, tax thresholds are frozen until 2031, which means your employees will see less of their pay rises while you’re paying the full cost.
Let’s unpack the Autumn Budget changes for employers and how they might affect you.
Budget Tax Changes For Businesses
The April 2025 employer National Insurance increase was painful enough.
The rate went from 13.8% to 15%, and the threshold dropped from £9,100 to £5,000. That meant you started paying National Insurance much earlier on each employee’s wages, and at a higher rate.
Now the minimum wage is going up across the board:
- Workers aged 21+: £12.21 → £12.71 per hour (4.1% increase)
- Workers aged 18-20: £10.00 → £10.85 per hour (8.5% increase)
- Workers aged 16-17 and apprentices: £7.55 → £8.00 per hour (6% increase)
These wage increases mean you’re paying even more in employer National Insurance, because you’re now paying 15% on higher wages. The two changes compound each other.
And then there’s the threshold freeze. Personal allowances and National Insurance thresholds are staying at their current levels until April 2031.
What this means is simple: as wages rise, more of your employees’ income gets taxed. You’re paying them more, but they’re not seeing the full benefit. It makes salary conversations awkward, and it’s going to keep happening for the next six years.
What This Budget Will Cost Businesses
Let’s work through three real examples to show what this means in cash terms.
Small café: 3 full-time employees on minimum wage
Assumptions: All staff aged 21+, 37.5 hours/week, 52 weeks/year, employer NI at 15% above £5,000.
- Current cost (2025/26): £79,893 per year
- April 2026 cost: £83,257 per year
- Extra cost: £3,364 per year (≈ £280/month)
Retail shop: 8 employees (4 full-time, 4 part-time at 20 hours/week)
Assumptions: All staff aged 21+, full-time at 37.5 hours/week, part-time at 20 hours/week, 52 weeks/year, employer NI at 15% above £5,000.
- Current cost: £161,936 per year
- April 2026 cost: £168,813 per year
- Extra cost: £6,877 per year (≈ £573/month)
Hospitality business: 12 staff, including younger workers
Assumptions: 8 full-time staff aged 21+, 4 full-time staff aged 18–20, 37.5 hours/week, 52 weeks/year, employer NI at 15% above £5,000 for 21+ only (0% for under-21s).
- Current cost: £291,047 per year
- April 2026 cost: £306,647 per year
- Extra cost: £15,600 per year (≈ £1,300/month)
These figures include both the wage increase and the employer National Insurance on those higher wages.
For businesses with younger workers, the impact is even steeper. An 8.5% increase for 18-20 year olds costs substantially more than the 4.1% rise for over-21s.
Does Employment Allowance (EA) Help?
Employment Allowance (EA) is a government scheme that reduces the amount of employer National Insurance you pay.
It’s not a rebate or a credit you claim back later; it directly reduces your NI bill each month until you’ve used it up or the tax year ends.
EA doubled from £5,000 to £10,500 in April 2025. The £100,000 eligibility cap was also scrapped, which means larger businesses that previously couldn’t claim it are now eligible.
If you qualify, you can offset up to £10,500 of your annual employer National Insurance bill. For small businesses, this makes a real difference. For anything bigger, it helps, but doesn’t cancel out the increases.
You can claim Employment Allowance if:
- You’re an employer with Class 1 NIC liabilities, and
- You are not a company where a single director is the only employee paid above the Secondary Threshold (≈£5,000 for 2025/26).
- You’re not a public-sector employer unless you’re a charity.
- Your employees don’t work entirely in household/personal services (nannies, etc.) unless they’re providing care/support.
You can’t claim if:
- You’re a sole director company where the director is the only employee earning above £5,000
- Your only staff are nannies, housekeepers, or gardeners
- You’re a public sector body (in some cases)
Many businesses that could claim EA don’t. If you’re eligible and not claiming it, you’re paying far more in National Insurance than you need to.
Contact us if you need help with your EA claim.
Preparing For Higher Tax Bills
Of course, you can’t stop all of this from happening, but you can prepare for it.
Here’s what to consider, but do seek assistance before making any changes.
Calculate Your Exact Cost Increase
Open your payroll system and list every employee earning below the new minimum wage rates:
- £12.71 per hour for over-21s
- £10.85 per hour for 18-20 year olds
- £8.00 per hour for 16-17 year olds and apprentices
For each employee, work out their annual wage increase. Take the difference between their current hourly rate and the new minimum wage, multiply by their weekly hours, then multiply by 52.
Add all those increases together. Now multiply that total by 1.15 to include the 15% employer National Insurance you’ll pay on those higher wages.
That’s your additional cost for the year. Divide by 12 to get the monthly impact.
Check Your Employment Allowance (EA) Status
As we covered, if you’re eligible for EA, that’s £10,500 off your National Insurance bill every year.
If you’re not sure whether you qualify or how to activate it, now’s the time to find out.
Review Wages Close to Minimum Wage
When minimum wage goes up, the gap between your lowest-paid and higher-paid staff shrinks.
Look at your payroll. If you have people earning £13.00 or £13.50 per hour now, they’re currently being paid above minimum wage. In April, when the minimum wage hits £12.71, that gap gets much smaller.
Someone who’s been with you for two years and knows the business inside out might suddenly find themselves earning only 30p or 50p more per hour than someone starting their first day. That causes problems.
Are you going to increase wages for experienced staff to maintain a meaningful gap, or let that gap shrink?
If you do nothing, expect morale problems and people potentially leaving. If you increase wages across the board to maintain gaps, you need to add that to your cost calculation from step one.
Decide How You’ll Foot The Bill
Take your total cost increase. Look at your projected revenue for 2026/27. Can you absorb this cost, or do you need to find the money?
If you need to find it, you have three core options:
- Increase prices: How much, and when? If you’re putting prices up, do it in February or March so customers have time to adjust.
- Reduce costs elsewhere: Where specifically? Which suppliers, which services, which expenses?
- Reduce hours: Whose hours, and by how much? What impact does this have on service quality or opening times?
There may be no easy answers here. Discuss with an accountant if you’re worried or uncertain.
How Double Point Can Help
At Double Point, we work with businesses facing exactly this situation. We’ll calculate your exact cost increase, check whether you’re claiming Employment Allowance, and help you work out where the money needs to come from.
We’ve helped clients restructure their payroll, identify cost savings they’d missed, and plan pricing changes that stick. This isn’t theory – it’s what we do every day for businesses like yours.
The April 2026 increase is four months away. That’s enough time to plan properly, but only if you start now.
Book a free consultation with us today. We’ll review your payroll and show you exactly what you’re facing – and what you can do about it.