The Autumn Budget sets out the Government’s response to fiscal pressures, the slowing economy, and the increasing need for UK growth. Changes to payroll, business rates, and forecasting lay behind the Chancellor’s tax increases, all of which affect finance teams in three key ways:
Below, we explore how the key changes in Reeves’ Budget will affect finance teams in mid-to-large organisations.
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Reeves announced a further three-year freeze on personal income tax and national insurance contribution (NIC) thresholds, until 2030/31. Dubbed a “stealth tax”, this is expected to raise £38 billion in extra revenue by ensuring employers and employees pay more tax on the same income. [1]
How does this affect finance?
Mid-market and larger employers may face a silent tax rise on the labour costs as a result of this tax freeze. Even modest pay increases, in line with inflation, may cost an organisation thousands in extra taxes because, when more employees hit higher tax thresholds, employer NICs increase.
Keep an eye out for creeping payroll costs, even if hiring remains flat. Scenario planning and comprehensive forecasting can make sure key stakeholders are aware of future increases.
Think of business rates as a discount card: Reeves’ budget is providing large discounted business rates to small and medium-sized retail, hospitality, and leisure (RHL) businesses, and small discounts to large RHL businesses.
This legislation begins in 2026/27 and will affect the following types of organisations:
How does this affect finance?
For complex, multi-site RHL organisations with large premises, the effect is currently negligible. However, this is subject to change. Mid-market RHL organisations, however, could see significant savings from these lower annual business rates, a hopeful sign considering the sector has struggled to recover in the years since the COVID-19 pandemic.
Because the lower multipliers are permanent, mid-market finance teams will be able to produce more accurate five-year forecasts that support business goals of consistent cash flow and financial growth.
For larger RHL organisations, the bottom line is this: If your business is large enough to fall outside the discounted business rate, reclassification of premises or changing premises altogether could result in better tax relief and lower operational costs.
From April 2029, the rate at which pension salary sacrifice contribution is taxed is changing. The first £2,000 of salary sacrifice pension contributions (per employee) will remain free of NIC. Contributions over £2,000 require employees and employers to pay primary and secondary NIC, respectively.
Currently, all salary sacrifice pension contributions are tax-free. However, according to Reeves, this new measure is expected to raise an additional £4.7bn in NIC revenue. [2]
How does this affect finance?
The new cap on salary sacrifice pension contributions means that both employees and employers will have to pay NIC on any sacrifice above £2,000. It’s fair to say that mid-market businesses often have higher pension contributions, and the higher the contribution, the higher the cost.
Finance teams must communicate this cost to key stakeholders, contributors, and group finance leaders as early as possible to ensure their forecasts are as accurate as possible. As the benefit of salary sacrifice shrinks, finance teams may be prompted to redesign schemes, forecast larger NIC costs, and communicate clear payslip breakdowns with staff who contribute over the threshold.
Something to note: non-sacrifice employer contributions will remain exempt from NICs. This may be a route that employees with higher incomes ask payroll or HR to consider.
The last thing finance teams should do is panic. Until the salary sacrifice change takes effect, it remains one of the most tax and NIC-effective ways to help your employees save for retirement. Likewise, dealing with the extending income tax and NIC freezes is daunting, but scenario planning and timely forecasting can mitigate cash flow risks.
Understandably, finance teams, CFOs, and group companies may feel worried about the changing financial regulations that face mid- to large organisations in the UK, but here are a few tips that can help finance teams control the mounting pressure:
You can read the full Autumn Budget 2025 here.
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