The Autumn Budget 2025 signals subtle but significant change for UK fintech employers. The main financial impacts are via fiscal drag on salaries, reduced NI efficiency on pensions, and less generous CGT relief on some exit routes. While headline rates for corporation tax and National Insurance contributions remain unchanged, frozen thresholds, new limits on reliefs, and tighter equity rules quietly increase the cost of hiring, rewarding, and retaining staff. Rather than offering fintech-specific incentives, the Budget affects firms indirectly-through payroll, pensions, equity structuring, and long-term workforce planning.
Payroll and Reward Costs:
Rising Marginal Costs
Income tax and most National Insurance thresholds are frozen until April 2031. As salaries rise to attract or retain senior talent, more pay falls into higher tax and NIC bands, increasing the effective employment cost.
This fiscal drag will hit London-based fintechs most acutely, where salaries for senior engineering, product, data, and leadership roles are already higher and market adjustments frequent. Regional fintechs outside London may face a smaller absolute cost impact but could struggle to compete for talent attracted to higher-paying hubs.
Illustrative example: For a senior engineer in London earning £120,000, an annual pay rise of 5% could increase total tax and NI by several thousand pounds, depending on the precise thresholds and rates at the time.
While expected wider employment law changes, such as the Employment Rights Bill, may strengthen protections on flexible working, redundancy, and worker classification, the primary driver of increased costs for fintech employers remains the Budget’s frozen thresholds and capped reliefs.
Pension and Benefits:
Rethinking Salary Sacrifice
From 6 April 2029, National Insurance relief on pension contributions made via salary sacrifice will be capped at £2,000 per employee per year. Contributions above this cap will attract employer NI at around the current employer rate and standard employee NIC.
Implications for fintech employers include:
- High pension sacrifice schemes used to optimise total compensation will become less tax-efficient.
- Senior hires exceeding the £2,000 cap may see reduced net benefits, potentially affecting retention.
- Employers may need to explore strategic alternatives, such as flexible benefits, retention bonuses, or long-term incentive plans, to remain competitive across regions.
Equity, Exits, and Share Schemes:
Adjusting to Tax Changes
Capital gains tax relief on disposals to Employee Ownership Trusts (EOTs) is halved from 100% to 50% from 26 November 2025. Anti-avoidance rules for certain share exchanges and internal reorganisations are also tightening, affecting fintechs with complex holding structures, share-for-share deals, or planned liquidity events.
This change has broader strategic implications: founders may need to rethink timing of exits, and EMI/CSOP schemes may require redesign to retain senior talent. Equity awards increasingly serve as both a reward and a retention tool, and UK fintechs must weigh the impact of reduced tax reliefs on staff motivation and succession planning.
Funding, Growth, and Startup Measures:
Limited New, Clearly Fintech-Specific Reliefs
The Budget’s tax rises and threshold freezes are expected to raise over £26bn annually by 2030–31, leaving limited new, clearly fintech-specific reliefs. Broader entrepreneurship and innovation programmes exist, which may indirectly benefit fintech, but targeted measures to reinforce the UK’s fintech leadership and payments infrastructure remain limited.
Practical Takeaways for Fintech Employers
- Compensation Planning: Build higher employer NI and fiscal drag into 3–5-year salary strategies. London fintechs may need to offer larger increases or creative reward packages, while regional firms should explore alternative retention strategies.
- Pension Strategy: Review salary sacrifice and bonus-into-pension schemes before 2029, modelling the £2,000 NI-relief cap on both cost and employee value. Consider flexible benefits or long-term incentives to retain key staff.
- Equity and Exit Planning: Reassess EOT, EMI, CSOP, and share exchange structures in light of CGT changes and anti-avoidance rules. Align equity strategies with retention, succession, and founder exit planning.
- Strategic Implications: UK fintech employers face rising marginal costs relative to international competitors. Forward-looking talent, reward, and equity strategies will be essential to attract and retain top-tier technical and leadership talent.
Conclusion
Autumn Budget 2025 may have left headline tax rates untouched, but frozen thresholds, caps on reliefs, and tighter equity rules quietly raise the cost of hiring, rewarding, and exiting key talent. For fintech employers, proactive planning across compensation, pensions, and equity structures- tailored to regional realities, and strategic priorities, will be essential to remain competitive in an increasingly complex UK market.
For further support regarding your upcoming hires in the UK, please get in touch with our team of EMEA specialists.
EMEA Leadership Team
Director
