UK Autumn Budget 2025: What It Means for Your Hiring Strategy

Introduction

The UK Autumn Budget 2025 introduces measures that will shape workforce planning for the year ahead. Rising employment costs, compliance changes and evolving worker expectations mean HR leaders, hiring managers and founders need to rethink how they attract, retain and manage talent across permanent roles, temporary staffing and contractor engagements.

1. Permanent Recruitment – Salary Pressures & Strategic Workforce Planning
   • Higher Salary Expectations: Frozen income tax and National Insurance thresholds mean employees will gradually move into higher tax bands, reducing take-home pay. Expect candidates to push for higher salaries – budget planning will be critical.
   • National Living Wage Increase: From April 2026, the National Living Wage rises to £12.71/hour. This will create ripple effects across pay structures, especially in lower-paid sectors, but also for mid-level roles to maintain parity.
   • Strategic Hiring: Focus on roles that deliver measurable ROI – digital transformation, compliance, and sustainability – while slowing general headcount growth. Multi-skilled talent will be in high demand.
2. Temporary Staffing – Flexibility in Uncertain Times
   • Why Temporary Roles Will Grow: Economic caution and rising employment costs make flexible staffing attractive. Temporary workers allow organisations to scale up or down without long-term commitments, particularly in technology, logistics, manufacturing and project-based work.
   • Cost Management: Higher minimum wage and frozen NI thresholds will increase costs. Regular benchmarking of pay rates and workforce budgets will help maintain competitiveness.
   • Compliance Reminder: With tighter HMRC enforcement and evolving employment status, ensure your supply chain is transparent and compliant. This includes clarity on pay, holiday entitlement and adherence to new worker protections.
3. Off-Payroll Contractors (Outside IR35) – Stability with Scrutiny
   • IR35 Rules Remain: The Budget leaves off-payroll working rules unchanged, but enforcement remains strict. Accurate Status Determination Statements (SDS) and documentation are essential for compliance.
   • Financial Considerations: Dividend tax increases and pension caps will affect limited-company contractors, which may influence their rate expectations or availability.

Compliance & Workers’ Rights – A Growing Priority

While the Budget didn’t overhaul IR35, it signals a broader push for fair work practices and umbrella company regulation. Organisations should anticipate:

• Greater scrutiny of payroll compliance.
• Stronger worker protections under upcoming Employment Rights legislation.
• The need for accredited partners and transparent supply chains.

(We’ll explore these compliance changes in detail in a separate blog.)

Strategic Considerations for HR Leaders

• Workforce Planning: Align hiring strategies with budget realities – prioritise critical roles and consider flexible staffing models.
• Talent Development: Leverage government-backed apprenticeship and training schemes to build internal capability and future-proof your workforce.
• Retention Focus: Rising salary expectations mean employee engagement and retention strategies will be more important than ever.
• Managing Rising Employment Costs: Explore options such as offshore talent for cost efficiency and resilience.
• Benchmarking: Regularly benchmark salaries and benefits to remain competitive in a tightening labour market.

At Vivo Talent, we support organisations with end-to-end recruitment strategies, benchmarking job roles and offshore solutions – helping you stay agile in a changing market.