This guide explains the key payroll, tax, and employment changes from April 2026 in simple terms, so you can take action with confidence.
From 1st April 2026, minimum wage rates have increased across all age groups.
- National Living Wage (21+): £12.71 per hour
- Check if there is any change for other age groups
What this means:
- Review employee wages immediately
- Check salary sacrifice schemes
- Ensure no deductions reduce pay below legal limits
Failing to comply can lead to penalties and reputational risk.
Major Reform in Statutory Sick Pay (SSP)
One of the biggest changes this year is in Statutory Sick Pay (SSP).
What’s new from 6th April 2026:
- No 3-day waiting period → SSP starts from Day 1st
- Lower Earnings Limit removed → Previously employees needed to earn at least £123 per week (2024/25 threshold) to qualify
- Payment capped at:
- 80% of average earnings or,
- Standard SSP rate (whichever is lower)
What this means:
- More employees now qualify for SSP
- Increased payroll calculations and admin
- Update sickness and absence policies
3. Day-One Employment Rights
Employees now receive certain benefits from their first day of employment.
Includes:
- Paternity leave
- Unpaid parental leave
- Bereavement leave
Updated pay rates
- £194.32 per week week (or 90% of earnings if lower Explain this point slightly)
What this means:
- Update employment contracts
- Train HR and payroll teams
- Ensure compliance from day one
4. Small Employers’ Relief Boost
Small businesses get extra support
Eligibility
- Employers paying ≤ £45,000 in Class 1 NI (is this annual or monthly)
Update
- Compensation increased from 8.5% to 9%
- Businesses can reclaim up to 109% of statutory payments
What this means
- Improved cash flow for small businesses
- Make sure claims are processed correctly
5. Company Car & Benefit-in-Kind (BIK) Changes
- BIK rates increased by 1% for petrol, diesel, and hybrid vehicles
- Electric vehicles follow separate rules
Important update:
- Mandatory payrolling of benefits delayed until April 2027
What this means:
- Review company car policies
- Prepare for future payroll changes
6. Homeworking & National Insurance Updates
Key changes:
- Employees can no longer claim homeworking tax relief directly
- New rules for voluntary Class 2 NI contributions (for overseas individuals)
What this means:
- Inform remote employees
- Review global workforce policies
7. Tax Codes and Personal Allowance
- Personal Allowance remains: £12,570
- PAYE threshold : £242/week or £1,048/month
- Emergency tax code: 1257L
What this means:
- Verify employee tax codes
- Avoid payroll errors
8. Stronger Enforcement Ahead
The upcoming Fair Work Agency will increase enforcement of employment laws.
What this means:
- More audits and checks
- Greater focus on payroll accuracy
- Less tolerance for errors
The Takeaway: What Should Businesses Do?
The 2026 changes focus heavily on employee rights and compliance.
Action checklist:
- Update payroll systems
- Review employee contracts
- rain HR and payroll teams
- Ensure compliance with SSP and wage laws
- Plan ahead for future changes
Final Thoughts
Staying updated with UK payroll changes 2026 is essential for avoiding penalties and running a smooth business.
At MyAccountico, we help businesses stay compliant, reduce risk, and focus on growth. Whether it’s payroll management, tax planning, or advisory, having expert support can make all the difference.