The UK Autumn Budget 2026 has brought two important areas into focus for employers: changes to the National Living Wage and National Minimum Wage, alongside updates to approved business mileage allowance rates.

Businesses should start reviewing their payroll arrangements, employee expenses and internal processes well ahead of the relevant implementation dates.

1. National Minimum Wage and National Living Wage Increase

From 1 April 2027, the National Living Wage and National Minimum Wage rates are scheduled to increase by 3.9%. The changes are expected to benefit approximately 2.3 million workers across the UK.

The revised hourly rates represent an important consideration for employers, particularly businesses with hourly-paid employees, apprentices and younger members of staff.

New hourly rates from 1 April 2027

Employee category	Current rate April 2026	New rate April 2027
21 and over	£12.71	£13.21
18–20 years	£10.85	£11.27
16–17 years	£8.00	£8.31
Eligible apprentices	£8.00	£8.31

2. Business Mileage Allowance Updates

Business mileage reimbursement is another area employers should review. The updated mileage allowance arrangements set out the rates applicable to qualifying business journeys.

Updated mileage allowance rates

Business mileage	Rate	Applicable from
First 10,000 business miles	55p per mile	6 April 2026
Business miles above 10,000	35p per mile	6 April 2027

These rates help determine whether qualifying business mileage reimbursements can be paid without Income Tax and National Insurance contributions. The correct treatment depends on factors such as vehicle type, mileage travelled and the circumstances of the payment.

3. Key Dates Employers Should Keep in Mind

The changes take effect across three important dates. Employers should ensure their payroll and expense processes are prepared accordingly.

6 April 2026 The 55p per mile rate for the first 10,000 qualifying business miles applies.

1 April 2027 Revised National Living Wage and National Minimum Wage rates take effect.

6 April 2027 The 35p per mile rate applies to qualifying business miles above 10,000.

4. What Should Employers Do Now?

Rather than waiting until the implementation dates, businesses should review their existing arrangements and make the necessary preparations.

01	Review employee pay rates Identify employees whose current hourly pay may fall below the revised minimum wage rates.
02	Update payroll systems Ensure payroll software and employee records reflect the revised rates when they take effect.
03	Review budgets and staffing costs Assess the financial impact of increased wage costs on business budgets and workforce planning.
04	Check working hours and deductions Review recorded working hours, pay calculations and deductions to identify potential minimum wage compliance issues.
05	Maintain accurate mileage records Record journey dates, destinations, business purposes and mileage details for employee expense claims.
06	Review expense policies Check mileage reimbursement policies, approval processes and payroll treatment where payments exceed approved amounts.

5. Staying Prepared for the Changes Ahead

These updates are a timely reminder that payroll and employee expense management require regular attention. Even relatively small changes to wage rates or mileage reimbursement arrangements can affect payroll calculations, business costs and internal compliance procedures.

Businesses should also retain supporting mileage claims and approvals, review apprentice records and communicate relevant changes to employees. Accurate records and well-maintained payroll processes can make the transition considerably smoother.