Autumn Budget 2026 What contractors and recruitment agencies need to know
The Autumn Budget, delivered on 28 October 2026, includes changes that contractors, recruitment agencies and employers will want to factor into their planning. Minimum wage increases and updates to business mileage rates are among the most relevant, alongside measures affecting smaller trading incomes and limited company shareholders.
At The Sterling Group, we have pulled together the key points for our contractor and agency community, including when the changes are expected to take effect.
Minimum wage rates rise from April 2027
From 1 April 2027, the National Living Wage for workers aged 21 and over will increase to £13.21 an hour. The minimum rate for 18 to 20-year-olds will rise to £11.27, while the rate for 16 to 17-year-olds and eligible apprentices will become £8.31. [1]
For recruitment agencies and employers, this is a prompt to review pay arrangements and budgets before April. Where assignments are paid close to the minimum wage, early discussions can help identify whether rates need adjusting.
For umbrella contractors, it is also useful to understand the difference between an assignment rate and gross taxable pay. An assignment rate needs to account for employment costs as well as the worker’s pay, so an increase in the minimum wage should be considered within the wider calculation.
Business mileage rates receive a permanent uplift
The Budget makes the 55p rate for the first 10,000 qualifying business miles in a personally owned car or van permanent. This rate already applies for the 2026/27 tax year. From 6 April 2027, the rate for qualifying mileage above 10,000 miles will increase from 25p to 35p. [2]
These are approved tax rates, rather than a requirement for every employer to reimburse mileage at that amount. The treatment will depend on the journey, the working arrangement and the payments made.
For contractors, eligibility remains essential. Before submitting expenses, check how the rules apply to your circumstances and keep accurate mileage
Parental Pay
Parental leave will be extended to include eligible self employed fathers and partners . The budget report says eligible parents will receive two weeks support from April 2029
Energy payment
Households living in properties in council tax bands A-D will receive a £100 one off payment to help with rising energy bills.
Standing charge from gas bills is being removed and the VAT cut on electricity bills is being extended until July
The Trading Allowance will increase to £3,000
From 6 April 2027, the Trading Allowance will rise from £1,000 to £3,000. The trading income reporting threshold for Self Assessment will also increase to £3,000. [3]
This could be relevant to individuals with small amounts of qualifying trading or miscellaneous income, including some people running a separate business alongside their main work.
It is not an additional tax-free allowance against umbrella employment pay, and it does not apply to a limited company’s turnover. Anyone considering using the allowance should check eligibility and how it compares with claiming actual allowable expenses.
Fuel duty support continues until July 2027
The temporary 5p-per-litre fuel duty cut has been extended until 1 July 2027, with the planned inflation increase also deferred until that date. [2]
For contractors travelling between jobs and businesses running vehicles, this is relevant to cost planning. It does not guarantee a reduction in pump prices, which are also affected by wider market conditions.
When pricing future work, it is sensible to keep travel costs under review rather than assume current fuel costs will remain fixed throughout an assignment.
What to do next
Agencies should start reviewing assignments that could be affected by April’s wage increases. Contractors should check mileage eligibility and record keeping, while limited company directors should keep future tax changes on the agenda with their accountant.
The most useful next step is to identify which announcements affect your working arrangements and when action is needed.
Whether you are a contractor with a question about your pay or an agency reviewing its payroll arrangements, speak to The Sterling Group team for support with your next steps.
Call 01925 626200 or visit www.thesterlinggroup.co.uk.
Information checked against official publications available on 28 October 2026. Some measures require legislation or further guidance. Individual tax treatment depends on your circumstances.
