Key UK Payroll Changes in the Tax Year 2026/27

Key PAYROLL changes affecting employers from April 2026

The new UK tax year starts on 6 April 2026, so now’s a great time to check that your payroll systems, employment contracts, and internal policies are all up to date with the latest statutory changes.

As a business owner, it’s important to remain compliant.

We’ve summarised the key UK Payroll changes in the Tax Year 2026-27 that will affect you as a business owner.

 

National Minimum Wage (NMW)

Effective 1 April 2026

The National Minimum Wage and National Living Wage rates increase across all age bands.

You can find the new changes happening from April 2026 in the table below:

Age / Category	New Rate (from April 2026)	Increase / Change
National Living Wage (21 and over)	£12.71/hr	Up 50p (≈ 4.1%)
18–20 year olds	£10.85/hr	Up 85p (≈ 8.5%)
16–17 year olds	£8.00/hr	Up 45p (≈ 6.0%)
Apprentices (under 19 or first year)	£8.00/hr	Up 45p (≈ 6.0%)

Employer actions:

• Ensure hourly pay rates meet the new statutory minimum from 1 April 2026.
• Check salary sacrifice schemes, deductions, and unpaid working time to avoid NMW underpayments.
• Read our blog to ensure you’re compliant and not making these common mistakes after the NMW increases.

To read more about the other changes as a result of NMW and how it impacts business owners, read our blog below.

PREPARING FOR WAGE INCREASES

 

Statutory Sick Pay (SSP)

Effective 6 April 2026

New SSP Rate increases to £123.25 per week, or 80% of average weekly earnings (AWE) if lower.

Major rule changes:

• SSP payable from Day 1 of sickness absence (removal of 3 waiting days).
• Lower Earnings Limit removed, meaning all employees are eligible regardless of earnings level.
• SSP calculated as the lower of 80% of AWE or the weekly SSP rate.

Impact for employers:

• More employees will qualify for SSP.
• Short-term sickness costs may increase.
• HR policies and payroll systems must be updated.

To read more about how the SSP changes impact business owners, read our blog below.

MANAGING CHANGES TO SSP

To understand more about SSP, read our blog below.

UNDERSTANDING SSP

 

Statutory Family Leave Pay Rates

Effective 6 April 2026

The standard weekly rate for statutory family-related payments increases to £194.32 per week, or 90% of average weekly earnings (whichever is lower).

This rate applies to:

• Statutory Maternity Pay (SMP) – after the first 6 weeks
• Statutory Paternity Pay (SPP)
• Statutory Adoption Pay (SAP)
• Shared Parental Pay (ShPP)
• Parental Bereavement Pay (SPBP)
• Statutory Neonatal Care Pay (SNCP)

The first 6 weeks of SMP/SAP remain at 90% of average weekly earnings with no cap.

Qualifying earnings threshold

The Lower Earnings Limit increases to £129 per week to qualify for statutory family payments.

 

Paternity Leave – Day One Right

Effective April 2026

Under new employment law reforms:

• Paternity leave becomes a Day 1 employment right
• The previous minimum service requirement is removed
• This means employees will be eligible regardless of length of service.

Employers should review their:

• Family leave policies
• Employee handbooks
• HR procedures

Our dedicated team provides flexible retained HR advice, one‑off consultancy projects, and support with people management, communication, rewards, benefits, and culture. We work with you to build a tailored people strategy with the option for ongoing support.

EXPLORE OUR HR ADVISORY SERVICES

 

Student Loan Changes

Effective April 2026

Student Loan Plan 5 becomes the default plan for new borrowers in England.

HMRC’s new starter checklist will be updated to reflect this change.

Holiday Pay and Leave Record Requirements

Although the major holiday pay reforms were introduced in 2024, they continue to affect payroll compliance in 2026/27.

Employers must ensure Holiday pay calculations include:

• Regular overtime
• Commission payments
• Allowances that are regularly paid

These elements must be included when calculating normal remuneration for statutory holiday pay.

Employers should retain records showing:

• Holiday accrual
• Leave taken
• Holiday pay calculations

Good record-keeping is important to demonstrate compliance and respond to HMRC or tribunal claims.

 

Summary of Key Changes

DATE	CHANGE
1 April 2026	National Minimum Wage Increases
6 April 2026	New tax year begins
6 April 2026	SSP rate increase and day-one entitlement
6April 2026	Statutory family pay increases
April 2026	Student Loan Plan 5 default

 

Stay Prepared — Let Us Handle Your Payroll 

Managing payroll changes and keeping up with evolving legislation can be time-consuming and complex. Let the TC Group payroll team take the pressure off.

Our experienced UK-based teams manage and process payroll for businesses of all sizes, keeping everything accurate, compliant and running smoothly – so your employees are paid correctly and on time, every time.

Take control of payroll with confidence. Get in touch today and find out how our outsourced payroll services can support your business.