Payroll changes April 2026: what employers need to know to stay compliant

26 February 2026 | posted in Payroll

From April 2026, there are a number of changes affecting payroll that employers need to be aware of, including increases to the National Minimum Wage, Statutory Sick Pay (SSP) and Statutory Maternity and Paternity Pay, alongside major changes to the way SSP is calculated and paid.

Here’s all the key dates and rates you need to be aware of:

National Minimum Wage

New National Minimum Wage and National Living Wage rates come into effect from 1 April 2026. The new rates for 2026-27 are:

*The apprentice rate is for apprentices aged under 19, or those aged 19 and over and in the first year of their apprenticeship.

Remember!

Make sure that any Salary Sacrifice Schemes such as pensions do not take the employee’s pay below the National Minimum Wage.

Changes to Statutory Sick Pay

There are significant changes to Statutory Sick Pay (SSP) in 2026. The key changes are:

• SSP increases to £123.25 per week or 80% of the employee’s average weekly earnings (whichever is lower).
• The Lower Earnings Limit rule is being removed. This means lower paid and part-time workers will now qualify for SSP.
• The three waiting days have been abolished. SSP will now be paid from the first full day of sickness absence.

Find out more about how SSP is changing from April 2026.

Remember!

Don’t forget to keep a record of the date of any sickness absences, and make sure you inform your payroll team or external payroll provider so they can ensure the correct SSP payments are made.

Statutory Parenting Pay

The weekly rate of Statutory Parenting Pay has increased from £187.18 in 2025-26 to £194.32 for tax year 2026-27.  The new rate comes into effect from 5 April 2026.

This includes Statutory Maternity Pay, Statutory Adoption Pay, Statutory Paternity Pay, Statutory Shared Parental Pay, Statutory Parental Bereavement Pay and Statutory Neonatal Care Pay.

From 6 April 2026, Paternity Leave and Unpaid Parental Leave become  a  ‘day one’ right. The requirement to have 26 weeks service to qualify for these is being scrapped.  In practical terms, this means a father hired on Monday can request paternity leave on Tuesday if their baby is born.

Statutory Neonatal Care Leave was introduced in April 2025, giving employees the right to up to 12 weeks’ Neonatal Care Leave from the first day of their employment if they or their partner have a baby that needs neonatal care. Neonatal care is specialised medical treatment for babies who are born premature, sick or at a low birth weight.

Student loan rates and thresholds

The threshold at which borrowers repay Student Loans has increased. The new thresholds from 6 April 2026 are:

Auto Enrolment Pensions – Qualifying Earnings thresholds 2026-27

These remain unchanged.

• The Lower level of Qualifying Earnings remains at £120 per week / £520 per month
• The Upper level of Qualifying Earnings remains at £967 per week / £4,189 per month

The minimum contribution percentages remain at 5% for the employee and 3% for the employer.

Income Tax Rates and Personal Tax Allowance

The standard Personal Tax Allowance for 2026-27 (i.e. the amount of income someone can earn without needing to pay tax on it), remains unchanged at:

• £242 per week
• £1,048 per month
• £12,570 per year.

There are no changes to the tax rates which remain at:

National Insurance

The Small Employers Relief compensation rate will increase to 9% from the 2026-27 tax year.

The rates and thresholds for the calculation of employee (primary) and employer (secondary) NIC remain unchanged from 2025-26, although the ‘Lower Earnings Limit’ (LEL) has increased slightly to £129 / week.

National Insurance Contribution Relief for businesses who employ former members of the UK regular armed forces has been extended to the 2027-28 tax year.

A full list of NIC rates can be found at Rates and thresholds for employers 2026 to 2027

Employment Allowance

Employment Allowance lets eligible businesses and charities reduce their annual Class 1 National Insurance Contributions.

• The Employment Allowance for 2026-27 remains at £10,500
• The £100,000 cap was removed in April 2025, meaning employers paying more than £100,000 in Class 1 National Insurance labilities can apply for Employment Allowance.
• If your company has only one director, they must not be the only employee liable for secondary Class 1 National Insurance.
• If you’re part of a group, only one company in the group can claim the allowance.

Benefits in Kind

Payrolling Benefits in Kind becomes mandatory from April 2027 but there are steps you can take to prepare now for changes to reporting Benefits in Kind.

Holiday Pay

Full-time staff are entitled to at least 28 days’ paid annual leave a year, equivalent to 5.6 weeks of holiday. Employers can include bank holidays as part of statutory annual leave.

Part-time workers are also entitled to 5.6 weeks’ holiday, but calculated on a pro-rata basis.

Mid-year starters and leavers and those working irregular hours are also entitled to up to 5.6 weeks statutory leave calculated based on the proportion of the year they work.

You can use the Gov.UK holiday entitlement calculator to work out how much leave an employee should get.

At least 4 weeks of the employee’s statutory entitlement must be paid at their ‘normal’ rate. The normal rate must include commission, regular overtime payments and any payments relating to length of service or professional qualifications. It does not usually include bonus payments.

Need further advice?

For further help or guidance on any of these changes, or to find out how outsourcing your payroll could help your business, please get in touch.

• Corby payroll: Tel 01536 461900
• Peterborough payroll: Tel 01733 397300
• Northampton payroll: Tel 01604 654254