Key UK Payroll Changes - Tax Year 2026/27

Key Payroll changes affecting employers from April 2026

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 and salary rates meet the new statutory minimum from 1 April 2026.

Check salary sacrifice schemes, deductions, and unpaid working time to avoid NMW underpayments.

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.

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

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 for 6 years  showing:

Holiday accrual

Leave taken

Holiday pay calculations

Good record-keeping is important to demonstrate compliance and respond to HMRC or tribunal claims.      Records to be kept for 6 years.

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