Payroll Changes from April 2026 – What Employers Need to Know April 28, 2026 Kieron McGahan Post in Uncategorized Payroll Changes from April 2026 – What Employers Need to Know From April 2026, a number of payroll rates and thresholds have changed. While PAYE tax bands and the standard personal allowance remain frozen, there are still important updates for employers, directors and payroll clients to be aware of. The main areas to review are National Minimum Wage rates, statutory payments, student loan thresholds, Employer National Insurance costs, and director salary planning for owner-managed limited companies. PAYE Income Tax The standard personal allowance remains £12,570 for 2026/27, with the basic rate band, higher rate threshold and additional rate threshold also unchanged. Although there is no headline increase in PAYE tax rates, frozen thresholds can still increase the tax burden over time where wages rise. National Insurance The employee primary threshold remains aligned with the personal allowance at £12,570 per year. The employer secondary threshold remains much lower at £5,000 per year, with employer National Insurance charged at 15% above that level. For many small employers, Employer National Insurance remains one of the key payroll cost pressures. National Minimum Wage and National Living Wage The following rates apply from 1 April 2026: Category 2026/27 hourly rate Aged 21 and over £12.71 Aged 18 to 20 £10.85 Under 18 £8.00 Apprentice rate £8.00 Employers should also check salaried staff, irregular hours, unpaid working time, deductions and salary sacrifice arrangements, as these can all affect minimum wage compliance. Statutory Sick Pay Statutory Sick Pay increases to £123.25 per week for 2026/27, or 80% of average weekly earnings if lower. This is an area where employers should make sure payroll software and internal absence procedures are up to date. Statutory Maternity, Paternity, Adoption and Related Payments The standard weekly rate for statutory maternity, paternity, adoption, shared parental, parental bereavement and neonatal care pay increases to £194.32 per week, or 90% of average weekly earnings if lower. Small employers may still be able to recover 109% of qualifying statutory family payments where eligible. Student Loans Student loan thresholds have also been updated for 2026/27: Loan type Annual threshold Plan 1 £26,900 Plan 2 £29,385 Plan 4 £33,795 Plan 5 £25,000 Postgraduate loan £21,000 Employment Allowance Employment Allowance remains available to eligible employers and can reduce the employer National Insurance bill by up to £10,500 for 2026/27. However, companies where the only employee paid above the secondary threshold is also a director are generally excluded. This means Employment Allowance needs to be checked carefully for small owner-managed companies. Director Salary Planning April is also a sensible time for limited company directors to review salary levels for the new tax year. For a sole director company with no other employees, the most efficient salary is not always the same as the full personal allowance because employer National Insurance may arise above the secondary threshold. Where there is a genuine additional employee and the company is eligible for Employment Allowance, a director salary of around £1,048 per month may often be more attractive, as it uses the personal allowance while the employer National Insurance cost may be covered by Employment Allowance. This should still be reviewed case by case, particularly where there is other income, student loan liability, benefits in kind, pension planning, or connected companies. Practical Points for Employers Check all employees are on the correct minimum wage rate from April 2026. Review salaries where staff are close to minimum wage. Ensure payroll software has been updated for 2026/27 rates. Check Employment Allowance eligibility before claiming. Review director salary levels for the new tax year. Make sure sickness and family leave procedures reflect the latest statutory rates. Need help with payroll? If you would like support with payroll, director salary planning, Employment Allowance, bookkeeping or tax compliance, please feel free to get in touch. KG McGahan Consulting Ltd Accountancy, tax and business support for small businesses and owner-managed companies. Contact KG McGahan Consulting “` [1]: https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2026-to-2027?utm_source=chatgpt.com “Rates and thresholds for employers 2026 to 2027”
Payroll Changes from April 2026 – What Employers Need to Know From April 2026, a number of payroll rates and thresholds have changed. While PAYE tax bands and the standard personal allowance remain frozen, there are still important updates for employers, directors and payroll clients to be aware of. The main areas to review are National Minimum Wage rates, statutory payments, student loan thresholds, Employer National Insurance costs, and director salary planning for owner-managed limited companies. PAYE Income Tax The standard personal allowance remains £12,570 for 2026/27, with the basic rate band, higher rate threshold and additional rate threshold also unchanged. Although there is no headline increase in PAYE tax rates, frozen thresholds can still increase the tax burden over time where wages rise. National Insurance The employee primary threshold remains aligned with the personal allowance at £12,570 per year. The employer secondary threshold remains much lower at £5,000 per year, with employer National Insurance charged at 15% above that level. For many small employers, Employer National Insurance remains one of the key payroll cost pressures. National Minimum Wage and National Living Wage The following rates apply from 1 April 2026: Category 2026/27 hourly rate Aged 21 and over £12.71 Aged 18 to 20 £10.85 Under 18 £8.00 Apprentice rate £8.00 Employers should also check salaried staff, irregular hours, unpaid working time, deductions and salary sacrifice arrangements, as these can all affect minimum wage compliance. Statutory Sick Pay Statutory Sick Pay increases to £123.25 per week for 2026/27, or 80% of average weekly earnings if lower. This is an area where employers should make sure payroll software and internal absence procedures are up to date. Statutory Maternity, Paternity, Adoption and Related Payments The standard weekly rate for statutory maternity, paternity, adoption, shared parental, parental bereavement and neonatal care pay increases to £194.32 per week, or 90% of average weekly earnings if lower. Small employers may still be able to recover 109% of qualifying statutory family payments where eligible. Student Loans Student loan thresholds have also been updated for 2026/27: Loan type Annual threshold Plan 1 £26,900 Plan 2 £29,385 Plan 4 £33,795 Plan 5 £25,000 Postgraduate loan £21,000 Employment Allowance Employment Allowance remains available to eligible employers and can reduce the employer National Insurance bill by up to £10,500 for 2026/27. However, companies where the only employee paid above the secondary threshold is also a director are generally excluded. This means Employment Allowance needs to be checked carefully for small owner-managed companies. Director Salary Planning April is also a sensible time for limited company directors to review salary levels for the new tax year. For a sole director company with no other employees, the most efficient salary is not always the same as the full personal allowance because employer National Insurance may arise above the secondary threshold. Where there is a genuine additional employee and the company is eligible for Employment Allowance, a director salary of around £1,048 per month may often be more attractive, as it uses the personal allowance while the employer National Insurance cost may be covered by Employment Allowance. This should still be reviewed case by case, particularly where there is other income, student loan liability, benefits in kind, pension planning, or connected companies. Practical Points for Employers Check all employees are on the correct minimum wage rate from April 2026. Review salaries where staff are close to minimum wage. Ensure payroll software has been updated for 2026/27 rates. Check Employment Allowance eligibility before claiming. Review director salary levels for the new tax year. Make sure sickness and family leave procedures reflect the latest statutory rates. Need help with payroll? If you would like support with payroll, director salary planning, Employment Allowance, bookkeeping or tax compliance, please feel free to get in touch. KG McGahan Consulting Ltd Accountancy, tax and business support for small businesses and owner-managed companies. Contact KG McGahan Consulting