Budget 2026: what it means for agencies and marketing teams

National Living Wage rises 3.9% in April 2027

On 1 April 2027 the National Living Wage will increase by 3.9% to £13.21 an hour, and the rate for 18 to 20-year-olds will rise by 3.9% to £11.27, according to the Budget document. The government expects the increase to benefit around 2.3 million workers.

For agencies, this matters in two places: your own junior and operations roles, and clients in sectors with many hourly-paid staff, such as retail and hospitality, whose marketing budgets may feel the pressure. It is worth building the new rates into 2027/28 planning now.

No rise in the headline rates of income tax, National Insurance or VAT

The Budget document states that there is “no increase to the headline rates of income tax, National Insurance contributions, or VAT”.

Parental pay for self-employed fathers and partners from April 2029

From April 2029, eligible self-employed fathers, partners and adopters in Great Britain will be able to access parental pay for the first time. The Budget document says this is set to benefit over 150,000 parents a year, and that the wider Parental Leave and Pay Review will conclude in early 2027. The CIPP reports that eligible parents will receive two weeks of support, currently worth up to £194 a week.

Many agencies rely on freelancers and small suppliers. Over time, this change may make it easier for self-employed partners to take time off around a birth or adoption, so it is sensible to have cover arrangements in mind for key freelance roles as well as employees.

A tougher line on non-compete clauses

The Budget confirms the government will legislate so that non-compete clauses are no longer a barrier to hiring for start-ups and scaling firms, and so that workers in the everyday economy are not prevented from moving jobs. It will consult on the wider use of restrictive practices and set out a detailed position in early 2027 (Budget document, HM Treasury).

Agencies that use non-competes or client non-solicitation clauses in employment contracts should watch for the consultation and take advice when the detail is published.

Trading Allowance tripled to £3,000

From 6 April 2027 the Trading Allowance rises from £1,000 to £3,000, to support people taking the first steps in starting a small business (Budget document).

Online marketplaces to collect VAT from October 2027

From October 2027, online marketplaces will be responsible for collecting VAT on sales by UK businesses that make more than £90,000 of sales through the marketplace. The Budget document says this will not affect personal sales. If you support e-commerce clients that sell through marketplaces, this is one to flag in their 2027 planning.

What this means for resourcing

Higher wage floors from April, alongside the Employment Rights Act changes coming into force this winter and next year, mean many agencies and in-house teams will look again at the balance between permanent hires and flexible support. Short-term cover for leave, busy periods or a specific project can keep clients well looked after without adding a permanent role before you are ready.

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