On Wednesday, 26th November 2025, at 12:35, the Chancellor, Rachel Reeves, delivered her second Budget speech, even though the OBR had released all the details before she began. The speech was the usual rowdy affair within the Westminster chamber, and the Chancellor spoke for over an hour and four minutes. The Budget focused on reducing the spending gap without additional borrowing, requiring either significant spending cuts or notable tax increases. This Budget was labelled “the hokey-cokey Budget” by Lindsay Hoyle due to the policy ideas floated and then withdrawn, resulting in several surprise announcements.
NATIONAL LIVING WAGE
The Chancellor announced a 4.1% increase in the National Living Wage, from £12.21 to £12.71 per hour, equivalent to an increase of around £900 per annum for a full-time worker from April 2026. Workers aged 18–20 will also see their minimum wage rise by 8.5%, from £10.00 to £10.85 per hour.
MAYACHI COMMENT – This increase in the National Living Wage will be welcomed by workers at the lower end of the labour market, especially younger workers who will see a larger uplift in earnings. However, businesses and the Resolution Foundation think tank believe this could price younger workers out of the market. Recruitment agencies placing temporary workers will need to factor this increase into their charge and pay rate calculations from April 2025.
TAXATION – CAPITAL GAINS TAX
It was announced that the 100% capital gains tax relief on business sales to Employee Ownership Trusts will be reduced to 50%, maintaining an incentive for employee-owned companies but scaling back the full exemption.
MAYACHI COMMENT – These measures will make the EOT model of exiting a business less attractive due to the introduction of capital gains tax liabilities.
TAXATION – PERSONAL TAX THRESHOLDS
The Chancellor confirmed that income tax and National Insurance thresholds will remain frozen from 2028–29, raising an additional £8bn.
MAYACHI COMMENT – This freeze will affect working-class people by pushing 780,000 more individuals into paying the basic rate of income tax and creating more than 920,000 additional higher-rate taxpayers.
TAXATION – PROPERTY TAXES
High-value council tax surcharges—labelled as a “mansion tax”—will apply to owners of properties over £2m from April 2028. Charges will start at £2,500 per annum, rising to £7,500 per annum for homes valued above £5m.
MAYACHI COMMENT – This additional tax will not help the already uncertain housing market but may stimulate activity in the £1m to £1.7m price bracket. Although this will affect only 1% of UK properties, many of them are in the Southeast, where a large number of recruitment agencies operate.
TAXATION – DIVIDENDS
From April 2026, dividend tax rates will increase by 2% for both basic- and higher-rate taxpayers, rising from 8.75% to 10.75% and 33.75% to 35.75% respectively.
MAYACHI COMMENT – This feels like another blow for business owners following the rise in employers’ National Insurance in April 2025. This increase could discourage new business creation and entrepreneurial activity, as the tax treatment of dividends becomes less advantageous. Many will feel they are being taxed twice, since dividends are paid after corporation tax. Directors should consult their accountants to understand the implications and whether adjustments to dividend distribution strategies are needed.
TAXATION – SAVINGS AND INVESTMENTS
From April 2027, the ISA allowance will remain at £20,000 per annum, provided at least £8,000 is invested in stocks and shares ISAs.
MAYACHI COMMENT – This change may expose customers to more risk if they do not receive appropriate advice on investment choices.
TAXATION – PENSIONS
Employers will be required to pay National Insurance on salary sacrifice pension contributions above £2,000 from April 2029.
MAYACHI COMMENT – Even the OBR is uncertain about how this policy will affect the economy, as it may lead employers to reduce future wage growth in favour of higher employer pension contributions.
EDUCATION
The government committed funding to improve school infrastructure, build new schools, upgrade playgrounds (£18m investment), and expand primary and secondary school libraries (£5m investment) to enhance educational facilities across England.
MAYACHI COMMENT – The education investment within this Budget focuses more on infrastructure than on teachers or teaching standards. Recruitment agencies working in the construction sector may have opportunities to tender for these government-backed projects.
TRANSPORT
The Chancellor announced major transport infrastructure investment, including funding for the Lower Thames Crossing, Midlands Rail Hub, Transpennine Route Upgrade, Northern Powerhouse Rail, and city-region transport projects to better connect towns and cities and drive economic growth.
MAYACHI COMMENT – Investment appears particularly focused on the rail sector, which is positive news for agencies supplying workers to this industry.
NHS AND HEALTHCARE
The Chancellor highlighted increased investment in the NHS, commitments to reduce waiting lists (down by 230,000), and the delivery of over 5.2 million additional appointments since the general election. The government will invest £300 million in technology to improve patient services and establish 250 new neighbourhood health centres (over 100 by 2030). All efficiency savings will be reinvested into NHS care.
MAYACHI COMMENT – Continued NHS investment is welcome, though IT and technology recruitment agencies may be the biggest beneficiaries due to the £300m technology allocation.
DEFENSE
The government reaffirmed plans to increase defence spending, with the UK set to spend 2.6% of GDP on defence by April 2027. Investments will be directed towards ports and defence industry hubs (Portsmouth, Barrow, Plymouth), shipbuilding, British Steel, and AI for national security.
MAYACHI COMMENT – Although much of this spending had been signposted before the Budget, it is useful to see where investment will be directed. Agencies supplying workers into defence and shipbuilding can now align their focus with government priorities.
ALCOHOL, FUEL, VAPING AND TOBACCO DUTY
- Fuel duty frozen for a further five months, followed by increases from September 2026
- Mileage-based charges on electric vehicles at 1.5p per mile and plug-in vehicles at 3p per mile from April 2028—around half the fuel duty paid by petrol drivers
- Planned increases in tobacco duty and the introduction of the new vaping duty from 2026 will still proceed
- Alcohol duty will continue to rise in line with inflation
MAYACHI COMMENT – Additional mileage taxes will make electric cars less attractive than previously thought, although the temporary freeze on fuel duty is welcomed. Thursday night drinks may become slightly more expensive, especially if inflation continues to rise!
