Employment costs are increasing again. For most motor trade businesses, that shows up first in the wage bill.
From 6 April 2025, employers’ National Insurance contributions rose to 15% on earnings above the lower threshold, with the level at which NICs become payable reduced from around £9,100 to £5,000 a year - meaning businesses start paying sooner and at a higher rate than before.
At the same time, the National Living Wage continues to rise. From April 2026, the rate for workers aged 21 and over is set to increase again, alongside adjustments to other age bands, as outlined on the GOV.UK National Minimum Wage page
For motor trade businesses - where payroll is a significant portion of operating costs - these statutory changes are not theoretical. They feed straight into the numbers you see on the weekly wage bill and influence how you think about budgets and hiring.
The Wider Impact on Pay Structures
Minimum wage increases do not just affect entry-level roles.
When the wage floor moves, it has a ripple effect. A service advisor earning just above minimum may reasonably expect a review. Someone with more experience may start comparing their rate against where the new baseline now sits.
That is where pressure can build.
If adjustments are not considered, the gap between roles narrows and internal pay structures start to feel uneven. Over time, that can create tension across a team.
Many experienced technicians earn comfortably above minimum wage. Even so, changes at the lower end of the scale can still shift expectations and influence how pay is perceived across the business.
What This Means for Hiring
Rising employment costs do not remove the need to recruit. Workshops still need capacity, and customers still expect the same level of service.
What changes is how hiring decisions are assessed.
Businesses may take longer to approve new roles or look more closely at whether a position can be restructured internally before going to market. Employers may look beyond the basic salary figure and consider the full cost of employing someone.
In some cases, overtime or short-term solutions may be used for longer than originally planned while budgets are considered.
Hiring does not stop, but it becomes more measured.
Headcount Decisions Under Pressure
Higher employer contributions increase the real cost of employment beyond the basic salary figure.
For independent garages in particular, where labour makes up a significant proportion of overall costs, increases to National Insurance and minimum wage can tighten margins more quickly than in larger dealer groups, where costs are spread across more sites.
The day-to-day workload does not change because statutory costs rise. Vehicles still need servicing and repair. Customers still expect the same turnaround times.
What can change is how quickly decisions are made and how carefully offers are structured.
Finding the Balance
Rising employment costs are now part of day-to-day business reality.
For motor trade employers, the focus is less about reacting to each announcement and more about understanding what those changes mean in practical terms.
National Insurance increases and minimum wage adjustments influence internal pay structures, labour rates and the overall cost of bringing someone new into the business. For smaller workshops, even one additional hire can noticeably change monthly overheads.
Planning ahead helps. Reviewing salary structures regularly, building these changes into pricing, pay reviews and future hiring plans and being realistic about total employment costs can prevent rushed hiring decisions later on.
These changes are unlikely to disappear. Approaching them with steadily rather than reactively tends to create more stability over time.