Payroll changes from April 2026: what employers need to know

April is always a busy month for payroll teams, and this year is no different as they prepare for the beginning of the new tax year.

From April 2026, several payroll changes take effect, including updates to National Insurance, statutory payments and student loan repayments. Below are the key payroll changes taking effect from April 2026 and what they mean for employers.

Employer National Insurance

The most significant payroll cost change remains the increase in employer National Insurance contributions.

Employer NICs are now charged at 15%, up from the previous 13.8%. For businesses with growing workforces or rising salaries, this increase continues to add to employment costs.

There is some relief available through the Employment Allowance, which has increased to £10,500 per year with the previous £100,000 eligibility cap removed. This means more businesses can claim the allowance to offset part of their employer National Insurance bill.

National Minimum Wage

The National Minimum Wage (NMW) will change, with the following new hourly rates applying:  

• Aged 21 and above (national living wage rate) – £12.71 
• Aged 18 to 20 inclusive – £10.85 
• Aged under 18 (but above compulsory school leaving age) – £8.00 
• Apprentices in their first year – £8.00

Statutory Sick Pay: higher rate and wider eligibility

Statutory Sick Pay (SSP) is increasing from £118.75 to £123.25 per week from 6 April 2026.

Additionally: 

• SSP payable from day one of sickness absence, with the removal of the traditional three unpaid waiting days 
• Removal of the Lower Earnings Limit, meaning employees no longer need to earn above a minimum threshold to qualify 
• SSP paid at 80% of average weekly earnings or the statutory weekly rate, whichever is lower 

For employers, these changes could mean a higher number of SSP claims, particularly among lower-paid or part-time workers who previously fell outside the eligibility rules.

Student loan deductions: new thresholds and plans

From 6 April 2026: 

• The threshold at which borrowers repay Student Loan Plan Type 1 loans increase from £26,065 to £26,900 per year – Type 1 loans are those issued to students before 2012. The rate remains at 9%. 
• The threshold for Student Loan Plan Type 2 loans (issued after 2012) increase from £28,470 to £29,385 per year. The rate remains at 9%. 
• The threshold for Student Loan Plan Type 4 loans (Scotland) increase from £32,745 to £33,795 per year. The rate remains at 9%. 
• The new (from April 2026) Student Loan plan Type 5 is introduced, with a threshold of £25,000 per year and a repayment rate of 9%.

Income tax thresholds and tax codes

The personal allowance remains frozen at £12,570.  The standard tax code for a full personal allowance remains 1257L (S1257L Scotland and C1257L Wales).

Similarly, the tax bandings remain the same: 

• 20% Basic Rate: up to £37,700  
• 40% Higher Rate: £37,701 to £125,140  
• 45% Additional Rate: above £125,140 

Key dates for payroll teams 

• 19 April – final PAYE deadline for the 2024/25 tax year 
• 31 May – P60 deadline 
• 5 July – PAYE settlement agreement deadline  
• 6 July – P11D deadline 
• 18 October – Deadline for paying tax and Class 1B NICs – non-electronic payments 
• 18 October – Deadline for paying PAYE, NICs, student loan and CIS deductions – non-electronic payments 
• 22 October – Deadline for electronic payments 

Taken together, these changes highlight how payroll has become an increasingly strategic function within businesses. 

Preparing early for the April 2026 changes will help ensure payroll runs smoothly when the new tax year begins. If you would like any assistance with getting prepared, please do get in touch.