Councils, along with other employers, will be impacted by the chancellor's decision to increase the minimum wage and freeze national insurance tax thresholds.
Rachel Reeves used her Budget speech to increase the wage for the lowest paid to £12.71 per hour from April 2026, with around 2.4 million low-paid workers expected to benefit.
In addition, the minimum wage for 18-20 year olds will increase by 8.5% to £10.85 per hour and for 16-17 year olds and apprentices by 6.0% to £8.00 per hour.
Reeves also revealed that income and employer national insurance tax thresholds would be frozen for three years. The move will mean around 780,000 more people paying income tax and is expected to raise £8bn for the Treasury.
She said the Government was ‘asking everyone to make a contribution' to fixing the nation's finances.
‘I know that maintaining these thresholds is a decision that will affect working people,' she admitted.
On pensions, Reeves said the Government would change salary sacrifice arrangements for pension contributions, capping the amount that can be sacrificed without paying national insurance at £2,000 per employee from 2029.
