Autumn Budget 2024: How It Affects Your Take-Home Pay in 2025/26
Autumn Budget 2024: How It Affects Your Take-Home Pay in 2025/26
The October 2024 Autumn Budget was one of the most significant in recent years. While headlines focused on employer National Insurance, the knock-on effects for employees are real. Here's a clear breakdown of what changed and what it means for your pay packet in 2025/26.
What Changed in the Budget
Employer National Insurance — The Big One
From April 2025, employers pay a higher rate of National Insurance on their staff:
| 2024/25 | 2025/26 | |
|---|---|---|
| Employer NI rate | 13.8% | 15% |
| Secondary threshold | £9,100/year | £5,000/year |
This means employers now pay NI on a wider slice of pay at a higher rate — an extra cost of roughly £900 per year for a £35,000 employee.
Does This Affect Your Take-Home Pay Directly?
Not immediately — employer NI is paid by the employer, not deducted from your salary. Your payslip numbers for income tax and employee NI are unchanged.
However, the indirect effects are real:
- Pay rise pressure — employers facing higher wage bills may offer smaller pay rises
- Benefit cuts — some employers have reduced perks to offset the cost
- Recruitment slowdown — businesses may be more cautious about hiring
Employee NI — No Change
Employee National Insurance rates stayed the same for 2025/26:
- 8% on earnings between £12,570 and £50,270
- 2% on earnings above £50,270
These rates were already cut from 10% and 12% respectively in the 2024 Spring Budget, so employees are still better off than they were in 2023/24.
Income Tax Bands — Frozen Again
The personal allowance and higher rate threshold remain frozen at:
- Personal Allowance: £12,570
- Higher rate threshold: £50,270
These have been frozen since April 2021 and will remain frozen until at least April 2028. With inflation over that period running above 20%, this freeze represents a significant real-terms tax increase (see our article on fiscal drag).
What Does This Mean for Your Pay?
Here's how employee take-home pay looks in 2025/26 (no pension, Plan 2 student loan excluded):
| Salary | Income Tax | Employee NI | Take Home |
|---|---|---|---|
| £20,000 | £1,486 | £597 | £17,917 |
| £30,000 | £3,486 | £1,397 | £25,117 |
| £40,000 | £5,486 | £2,197 | £32,317 |
| £50,000 | £7,486 | £2,997 | £39,517 |
| £60,000 | £11,432 | £3,157 | £45,411 |
| £80,000 | £19,432 | £3,557 | £57,011 |
| £100,000 | £27,432 | £3,957 | £68,611 |
Use our salary calculator to get your exact figures including pension and student loan.
The Minimum Wage Increase
One genuinely positive change from April 2025: the National Living Wage rose to £12.21/hour (for workers 21 and over), up from £11.44. For a full-time worker on minimum wage, that's roughly £1,600 more per year gross.
Should You Adjust Your Financial Plans?
Given the Budget changes, here are a few things worth reviewing:
1. Pension contributions
If your employer is facing higher NI costs, some are offering salary sacrifice pension top-ups to offset — this saves both sides NI. Worth asking HR.
2. Tax code check
Make sure your tax code is correct. With frozen allowances, any coding errors are more costly. Check your payslip for your code and verify it with HMRC if anything looks off.
3. Salary negotiation
When negotiating pay, factor in that employers now face higher per-head costs. Framing a pay rise in terms of total employment cost can help.
Summary
Your payslip deductions for income tax and employee NI are unchanged for 2025/26. The employer NI rise affects you indirectly through wage growth and company spending decisions rather than a direct deduction. The bigger long-term squeeze is the continued freeze on tax-free allowances — explore our fiscal drag guide for the full picture.
Calculate your exact 2025/26 take-home pay with our UK Salary Calculator — just enter your gross salary and select 2025/26.