Navigating The Autumn 2026 Budget: What Recruiters Need To Know
Stewart Roberts| Mayachi

Taking your recruitment agency to the next level!

On Wednesday 28 October 2026, at 12:35 pm, the new Chancellor, John Healey, delivered his first Budget speech under the new Andy Burnham Government, describing it as a “Budget for the working people of Britain”.


The speech was the usual rowdy affair in the Westminster chamber, and the Chancellor spoke for over 55 minutes. The Budget focused on giving “households breathing space from some of the everyday costs, providing targeted support for businesses and self-employed people, and starting the long-term action needed to get energy costs down for good”.


NATIONAL LIVING WAGE

The Chancellor announced a 3.9% increase in the National Living Wage, from £12.71 to £13.20 per hour. This is equivalent to an increase of around £819 per annum for a full-time worker from April 2027. Workers aged 18–20 will also see their minimum wage rise by 3.9%, from £10.85 to £11.27 per hour.


MAYACHI COMMENT – This increase in the National Living Wage will be welcomed by millions of workers facing continued pressure on household finances, particularly younger workers, who will see an increase in their earnings. Recruitment agencies placing temporary workers will need to factor this increase into their charge and pay rate calculations from April 2027.


TAXATION – CAPITAL GAINS TAX

The Chancellor announced two Capital Gains Tax measures. Reducing the Business Asset Disposal Relief threshold from £1 million to £500,000 and introducing founders’ relief at a 10% rate on lifetime gains of up to £10 million for founders of successful firms.


MAYACHI COMMENT – Although we do not yet know which founders of high-growth, innovative companies will qualify for the new relief, these Capital Gains Tax changes could benefit recruitment agency owners looking to sell or exit their businesses.


TAXATION – INCOME TAX AND DIVIDENDS

The Chancellor confirmed that there would be no changes to the taxation of dividends or employment income.


MAYACHI COMMENT – This is welcome news for many recruitment agency owners, particularly given that the previous Budget saw an increase in dividend tax rates for basic- and higher-rate taxpayers. The freeze on income tax is in line with the Labour manifesto and is also welcome news.


TAXATION – SAVINGS AND INVESTMENTS

From April 2027, the annual ISA allowance will remain at £20,000, with previously announced changes to cash ISAs being revoked.


MAYACHI COMMENT – This is welcome news, as the previous policy could have increased the risk of customers not receiving appropriate advice about their investment choices.


BUSINESS RATES AND VAT ON ELECTRICITY

The Chancellor said the new British Industrial Competitiveness Scheme would cut electricity bills by 25% for 10,000 firms from April, with backdated payments available for eligible energy costs incurred this year. The Chancellor also said that the traditional business rates relief supplement would be extended by two years as part of wider support measures.


MAYACHI COMMENT – This is welcome news, although it remains unclear whether recruitment agencies will be eligible for the business rates relief and any support relating to VAT on their electricity bills.


TRANSPORT

The Chancellor cited transport investment as part of wider regional growth plans. He announced £1.5 billion in additional loans for mayoral authorities, with examples including the Black Country Metro extension, the reopening of Doncaster Airport and the Bakerloo Line extension. He also allocated £30 million for Cardiff Parkway station. These measures were presented as part of devolved local infrastructure funding rather than a nationwide transport programme.


MAYACHI COMMENT – The shift towards mayoral authorities overseeing transport investment may create opportunities for recruitment agencies to work with local authorities and provide staff for these specific projects.


ENERGY

The Chancellor said energy policy would prioritise cheaper bills. A new energy wealth fund was launched, and a gas deal was approved, which is expected to protect jobs and add £2.9 billion to the UK economy. Clean-power projects would proceed only if they lower bills and can connect to the grid. Plans also included fixed-price renewables, GB Grid reform and direct funding for hydrogen.


MAYACHI COMMENT – The move towards greater UK energy production presents a significant opportunity for recruitment agencies providing staffing solutions to the energy and renewables sectors.


NHS AND HEALTHCARE

The Chancellor said NHS spending is £37 billion higher this year than in the final year of the previous Conservative government. He and the Health Secretary will review NHS productivity and the use of AI, aiming to reduce administrative workloads so that staff can spend more time with patients. He also cited more than £1 billion in new life sciences investment, backed by £70 million in government support.


MAYACHI COMMENT – Improving productivity through AI could help reduce NHS waiting times. However, a reduction in the use of agency staff could negatively affect the recruitment industry. The additional funding for the life sciences sector should benefit agencies providing staff to businesses operating in this industry.


DEFENCE

The Chancellor said defence spending is £14 billion higher than in the final year of the previous Conservative government. He also confirmed plans to reach NATO’s 3.5%-of-GDP commitment by 2035, targeting 3% by 2030. Measures include up to £5 billion in investment and lending over four years through the National Wealth Fund and British Business Bank, alongside greater private investment and joint procurement with allies.


MAYACHI COMMENT – Greater private investment and joint procurement could benefit UK companies, particularly recruitment agencies working with these businesses to provide the staff they need.


HOUSING

The Chancellor announced an additional £1.5 billion for social and affordable housing, bringing the government’s total commitment to £40 billion. Councils would receive extended access to cheaper borrowing, and land sold to social housing providers would become VAT-free. He also announced £4.7 billion in government-backed lending for a first-time buyer equity loan scheme, planned for next spring and aimed at buyers without family financial support.


MAYACHI COMMENT – The announced investment appeared to focus more on helping people onto the housing ladder than on increasing housebuilding, which may disappoint businesses in the construction sector.


ALCOHOL, FUEL, VAPING AND TOBACCO DUTY

The 5p fuel duty cut and the reduced red diesel rate will be extended to July 2027.

Mileage rates, previously increased from 45p to 55p per mile earlier in the year, will be made permanent. An increase in the mileage rate for business travel exceeding 10,000 miles, from 25p to 35p per mile, was also announced.


No changes to alcohol, vaping or tobacco duties were announced.


MAYACHI COMMENT – Confirmation that the mileage rates are permanent, together with the increase in the higher mileage allowance, is good news for agency owners who travel to visit clients and candidates.

Thursday-night drinks may become slightly more expensive, particularly if inflation continues to rise!


Link to Mayachi Blog Here: NAVIGATING THE AUTUMN 2026 BUDGET – WHAT RECRUITERS NEED TO KNOW


By WTT Legal • October 30, 2026
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By Bishopgate • October 19, 2026
Definitions Widen The scope of Right to Work (RTW) obligations is expanding significantly. Under the new framework, organisations will be required to consider not only employees, but also subcontractors and other workers engaged within their supply chain. This broadens the responsibility for verifying legal working status and increases the number of individuals who will require RTW checks. Liability Permeates Through the Supply Chain Reflecting the direction taken by the April 2026 Joint Liability provisions, liability for illegal working will no longer sit solely with the direct employer or labour provider. Responsibility can now extend up the labour supply chain, meaning organisations may face enforcement action where illegal working occurs within their workforce ecosystem, even where they are not the direct engager. How Will RTW Changes Affect Contractors? Historically, it was not uncommon for self-employed workers to provide documentation at a later stage, as many engagements sat outside the traditional RTW framework. This approach is unlikely to remain viable under the new regime. Workers should now expect to undergo full RTW verification before commencing work. In many cases, checks may be carried out by multiple parties, including labour providers, umbrella companies, agencies and end clients seeking to protect their own statutory position. As a result, duplicate checks are likely to become commonplace across the supply chain. The changes will also require greater operational discipline. Informal processes, where workers begin work before compliance checks are completed, will present a significant risk. Organisations will need robust onboarding procedures to ensure all workers are fully verified, recorded and authorised before accessing site or commencing work. Under the previous framework, where an umbrella company supplied a worker to a client, liability for an illegal worker would generally rest with the umbrella company. Under the proposed changes, liability may extend beyond the direct engager. While the umbrella company remains responsible for conducting compliant RTW checks, organisations further up the supply chain may also face exposure where due diligence has not been exercised. For example, where a contractor engages a limited company and an individual working under that arrangement is subsequently found not to have the right to work, both the limited company and potentially the contractor may come under scrutiny. Similarly, where a worker provides a substitute and that individual has not undergone appropriate RTW verification, liability may extend through the engagement chain if adequate controls have not been implemented. It is important to note that workers employed directly by one organisation and deployed to a client's site are generally outside the scope of Extended Liability. In such circumstances, the client would not typically inherit liability for RTW failures of the direct employer. A further consideration is the concept of statutory excuse. If an umbrella company has conducted a compliant RTW check, but the receiving organisation has not undertaken its own verification, the umbrella company may have a statutory excuse against penalty while the client may not. This creates a scenario where different parties in the same supply chain face materially different compliance outcomes. Can the Client or Agency Rely on the Umbrella Company's Right to Work Check? No. RTW checks are not transferable and do not provide a statutory excuse to another organisation. Each party seeking protection under the legislation must undertake and retain evidence of its own compliant check. Organisations should therefore review existing processes and ensure they are not relying on checks completed by suppliers, agencies or umbrella companies. What About Impersonation? Impersonation remains a significant compliance risk. It is anticipated that organisations will be expected to take reasonable steps to ensure that the individual presenting for work is the same individual whose RTW status has been verified. Where a different person is found to be working in place of the verified individual, organisations that failed to identify or prevent the substitution may face liability. Digital identity verification, biometric validation and technology-enabled site access controls are expected to play an increasingly important role in mitigating this risk. What Can We Expect to See Going Forward? The introduction of Extended Liability is likely to drive substantially higher levels of due diligence across labour supply chains. Clients, Managed Service Providers (MSPs), agencies and contractors are expected to take a far more active role in verifying RTW compliance, rather than assuming responsibility sits elsewhere in the supply chain. The use of digital identity verification and workforce management technology is also expected to increase as organisations seek to create auditable compliance frameworks and reduce the administrative burden associated with manual checking processes. Greater collaboration between clients and suppliers is also likely as organisations work together to maintain compliance and demonstrate robust governance. How Should You Prepare for Upcoming Changes? Organisations should consider taking the following steps: Map all workforce engagement models to understand where workers are employed, self-employed, supplied via umbrella companies or engaged through limited companies. Identify who within the organisation is responsible for conducting RTW checks and establish a consistent, auditable process. Review existing worker populations and address any gaps where RTW checks may not previously have been required. Undertake supply chain due diligence and review contractual arrangements with labour providers and subcontractors. Implement substitution controls to ensure replacement workers cannot commence work without appropriate verification. Assess the viability of digital identity verification, facial recognition or access-control technology where appropriate. Establish a secure process for retaining RTW records and evidence for audit and enforcement purposes. Provide training to operational and site-based teams to ensure compliance obligations are understood and consistently applied. In summary, the objective of the changes is to ensure all parties within a labour supply chain take reasonable and proactive steps to prevent illegal working, rather than relying on another organisation to manage the risk. How Does This Affect Bishopsgate Operations? Bishopsgate already conducts comprehensive RTW checks on selfemployed workers and is therefore well positioned for the proposed changes. Online identity verification services may provide additional compliance assurance, subject to client requirements and cost considerations. Bishopsgate provides client education and training sessions to support customers in updating their own compliance processes. Enhanced monitoring of workers with time-limited permissions should be implemented, with regular updates shared with clients where appropriate. Whilst Bishopsgate cannot assume responsibility for a client's RTW obligations, it can support compliance efforts through collaboration and information sharing, such as notifying clients when related compliance checks have been completed.
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