HR in Travel: One Week On From the 2025 Budget – What It Really Means for Our Sector

A week has passed since the 2025 Budget. The dust has settled, the likelihood of U-turns feels slim, and while this wasn’t the business-boosting, confidence-lifting budget many in travel were hoping for, we now at least have clarity to plan ahead.

For HR professionals in the travel industry, three measures announced by Rachel Reeves stand out:

• A £2,000 annual cap on tax-free pension savings via salary exchange

• Rises to the National Living Wage and Minimum Wage

• Fully funded apprenticeship training for under-25s in SMEs

Below is what each means in practice.

1. Pensions: Salary Sacrifice Cap from April 2029

From April 2029, only the first £2,000 of salary-sacrificed pension contributions will be exempt from National Insurance. Anything above that will trigger NI charges for both employer and employee.

Impact on Travel Employers & Employees

• Travel businesses may face higher employment costs.

• Employees making larger pension contributions will see reduced tax efficiency, potentially saving less for retirement.

• This may heighten concern among older employees, already facing a tougher job market and struggling to save enough.

What HR Should Do

• Review current salary-sacrifice schemes well ahead of 2029.

• Communicate the changes clearly and early — with worked examples to reduce employee anxiety.

• Encourage employees to consider maximising contributions before the deadline (noting that the government may still refine the policy).

There’s a short-term revenue gain for the government, but a long-term risk of lower pension saving at a time when people can least afford it.

2. National Living Wage & Minimum Wage Increases

• NLW (21+) rises from £12.21 to £12.71.

• Minimum Wage (20 and under) increases to £10.85.

• Apprentice rate rises 6% to £8.00.

Impact on Travel & Hospitality

These industries traditionally operate on tight margins, so increased wage floors put acute pressure on SMEs. Higher entry-level wages can also narrow pay differentials, making it more difficult to reward employees with greater responsibility.

Ian Brooks (Gail Kenny Executive Recruitment) highlights:

“Anything that increases employment costs will cause employers to think carefully about their hiring intentions for 2026 and onwards… particularly at the lower end of the market.

“We are also keeping a close eye on the new Employment Rights Bill which is currently facing amendments from the House of Lords.”

3. Apprenticeship Funding for Under-25s

The government confirmed that apprenticeship training for under-25s will become free for SMEs, backed by £725m under the Growth and Skills Levy.

Opportunities for Travel Employers

Claire Steiner (HR in Travel) comments,

“One positive note from the budget is the government recognition of apprenticeships. It provides accessible, respected routes into the travel sector, equips young people with practical, future-ready skills, and supports regional employment and social mobility. For SMEs, apprenticeships reduce training costs, ease skills shortages, and improve staff retention, creating a stronger, more diverse talent pipeline.   

By backing apprenticeships, the government strengthens both youth opportunity and the long-term resilience of the UK travel industry.    It also helps provide more affordable and accessible workforce development from entry level employees to the upskilling of existing staff helping to build careers.”

However, this does little to support the growing number of over-50s in the workforce, an important gap HR teams must still address to create a healthy, diverse talent pipeline.

HR Priorities

• Strengthen early-career and apprenticeship strategy

• Build digital and AI learning into junior roles

• Offer quality L&D and clear progression pathways

• Improve onboarding with mentors/buddies to boost long-term retention

Staying Pragmatic: HR’s Role in the Year Ahead

Nicky Lyle, Group HR Director at Hotelplan and Founding team member summarises:

“Budgets inevitably bring a mix of pressures and opportunities. It’s always a good time to pause and remember to stay pragmatic and people focused. Rising cost considerations will no doubt put pressure on us to scrutinise workforce planning and benefits more closely, but the budget’s phasing also gives us time to take a considered approach.

Our role is to translate these macro changes into clear, reassuring guidance as well-informed employees are the best foundation to navigate changes.  Thinking about the changes to salary-sacrifice pension arrangements, for some employees, particularly those sacrificing larger sums into their pensions – this change may impact take home pay.  For others, especially anyone contributing under auto-enrolment minimums, nothing may change.

In HR, it’s critical that we re-evaluate how we communicate total reward packages and ensure that compensation is transparent, fair, and understood.  Our role is to help people understand what this means for them – giving clear information, exploring alternatives, and supporting financial wellbeing as everyone adjusts. Ultimately, we want to make sure everyone is better positioned through clear guidance for long-term stability, even as tax and pension rules evolve”

Conclusion: Plan Early, Communicate Often

Travel employers should resist knee-jerk reactions and instead take a structured approach to:

• Reviewing employment costs

• Examining payroll and workforce planning

• Clarifying impacts on different employee groups

• Maintaining open, reassuring communication

Employees will be looking to HR for guidance, clarity, and stability. With a long lead-in to 2029, travel companies have the chance to redesign benefits, sharpen their reward strategy, and strengthen competitiveness.

The message is simple: start planning early and keep your people in the loop.