The November Budget landed last week, and it was a big one. With a mix of tax rises, welfare changes, business measures and labour-market implications, it’s set to reshape hiring, reward strategies and the outlook for UK jobseekers over the next few years.
Key Highlights From the 2025 UK Budget
Income tax thresholds frozen until 2030–31
The Chancellor confirmed that the personal allowance and higher-rate tax thresholds will remain frozen for another three years. This ongoing “fiscal drag” means more workers will slip into higher tax bands as wages rise.
Why it matters:
• Workers’ take-home pay won’t stretch as far
• Employers may see increased pressure for inflation-matching salary reviews
• Higher-skilled workers may demand larger rises to offset net-pay erosion
New rules for pension salary sacrifice
A major change: the government is introducing a £2,000 cap on NI-free salary-sacrifice pension contributions. Anything above that still gets tax relief, but not the NI saving.
Impact:
• Increases payroll costs for businesses using generous salary-sacrifice schemes
• Reduces the net benefit for higher-earning staff
• Likely to prompt a rethink of reward and benefits packages
Dividend tax increases
The government is raising taxes on dividends, increasing the burden on:
• Company directors
• Contractors working via personal service companies
• Investors receiving dividend income
Electric vehicle (EV) road tax introduced
EVs will now pay Vehicle Excise Duty, ending their tax-free status.
Employer relevance:
• Increased costs for fleets and company-car schemes
• Potential adjustments to mobility allowances and benefits
Two-child benefit cap scrapped
This was one of the most significant welfare announcements. From April next year, families will once again receive support for all children.
Why jobseekers will feel this:
• More financial stability for low-income families
• Reduced pressure to prioritise any job over the right job
• Potential rise in workforce participation over time
Growth forecasts: a slight upgrade now, weaker later
The OBR predicts a little more growth this year but a flatter picture in later years. Recruiters and employers should expect a steady but unspectacular labour market rather than a boom.
What This Budget Means for Employers
Hiring will remain competitive
With fiscal drag reducing take-home pay, employees may become more selective - and more vocal about salary expectations. Employers may need to:
• Benchmark salaries more frequently
• Offer clearer progression pathways
• Strengthen employer branding to stand out
Benefits packages will need a refresh
The cap on NI-free pension salary sacrifice affects both payroll planning and employee rewards. Expect more organisations to explore:
• Flexible benefits
• Health & wellbeing perks
• Salary-plus-bonus models
• Enhanced learning budgets to attract talent
That said, many employers feel the Budget didn’t go far enough to stimulate growth or simplify the landscape they operate in. As Neil Carberry, CEO of The Recruitment and Employment Confederation, put it:
“When the Chancellor put growth at the heart of her speech, we have to be honest that there was too little to get business investing. A forest of small changes will make our business tax system even more complex and raise more revenue from employers who do the right thing… Overall, not the challenge of last year - but no real sign of a coherent plan for growth.”
This perspective mirrors what many organisations are feeling: that while there are pockets of progress, the cumulative effect of tax tweaks, regulatory shifts and rising employment costs adds pressure at a time when businesses are already stretched.
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Sector-specific pressures
Some industries will feel the Budget more directly:
• Tech / iGaming - increased remote gambling duty may slow hiring growth
• Transport & logistics - EV fleet taxation increases operating costs
• Public sector - efficiency savings and restructuring may impact headcount
• Care, social work & education - removal of the two-child cap could ease pressure on workforce families but doesn’t address staffing shortages directly
What This Budget Means for Jobseekers
Higher living costs = sharper focus on pay
With frozen thresholds and rising taxes, workers may push for better pay sooner than expected. This could lead to:
Faster job-change cycles
More negotiation at offer stage
Increased interest in roles with bonuses or clear pay-progression structures
More support for families
Ending the two-child cap gives many households extra breathing room. Jobseekers with childcare responsibilities may feel more empowered to:
Seek flexible working
Retrain or reskill
Pursue higher-skilled or career-changing roles
Contractors may reassess their setup
Changes to dividend taxation and pensions could push more contractors to look for:
PAYE roles
Long-term fixed-term contracts
Hybrid freelance/PAYE models
Recruiters can support this transition with clear guidance and strong payroll options.
National Minimum Wage Increases
Alongside the major tax and welfare announcements, the Budget also confirmed increases to the National Minimum Wage (NMW) and National Living Wage (NLW) from April next year. Millions of UK workers on lower incomes will see a boost to their pay packets as a result.
The new rates are:
£12.71 per hour for workers aged 21+ (National Living Wage)
£10.85 per hour for 18-20-year-olds
£8.00 per hour for 16-17-year-olds and apprentices
What this means for employers:
With labour costs rising again, organisations - especially in retail, hospitality, social care, logistics and manufacturing - will need to plan carefully forhigher wage bills. This may drive renewed focus on workforce planning, productivity initiatives and ensuring that pay structures remain competitive without putting pressure on margins. Employers may also see rising expectations for wage progression above entry-level roles.
What this means for jobseekers:
For candidates, the uplift provides greater financial stability and may make certain lower-paid sectors more attractive. It also intensifies competition, as higher advertised wages could draw in more applicants. Workers should still pay close attention to the total package - including benefits, flexibility and development opportunities - as employers adjust to new cost pressures.
This increase sits alongside the wider Budget theme of boosting support for lower-income households while asking businesses and higher earners to absorb more of the fiscal load. It will be an important factor in shaping hiring, retention and salary expectations through 2025-26.
The Bottom Line
This Budget doesn’t deliver big tax cuts or sweeping pro-business incentives - instead, it focuses on stability, fiscal tightening and welfare reform.
For employers, it means tighter payroll planning, rising salary expectations and the need to rethink reward strategies.
For jobseekers, it means slightly higher living costs, but also more targeted support for families and a labour market that still offers strong mobility.
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