For 2026/27, the five key payroll changes are: [NLW to £12.71, SSP from day one, new SSP rate of £123.25, Plan 5 student loans, redundancy cap to £751].
A new tax year means new rates, new thresholds, and a fresh set of changes to get your head around. And 2026/27 brings some genuinely important updates—particularly around statutory sick pay (SSP) and national minimum wage—that every payroll team needs to be ready for in the coming year.
To make things easier for you, we’ve pulled together the key payroll changes for 2026/27 in one place. We’ll cover income tax rates, National Insurance (NI) thresholds, national minimum wage (NMW), statutory payments, student loan thresholds, and a handful of other updates worth knowing. Let’s get into it!
Income tax rates and thresholds for 2026/27
Scotland
Scottish taxpayers have a slightly different picture for 2026/27. The starter and basic rate band limits have both increased by 7.4%, which means the points at which employees move into the basic and intermediate rates have shifted upward. In practice, lower earners in Scotland will pay a little less income tax than they did last year. The higher, advanced, and top thresholds remain frozen.
| Band | Rate | Earnings |
|---|---|---|
| Starter | 19% | Up to £3,967 |
| Basic | 20% | £3,968 to £16,956 |
| Intermediate | 21% | £16,957 to £31,092 |
| Higher | 42% | £31,093 to £62,430 |
| Advanced | 45% | £62,431 to £125,140 |
| Top | 48% | Above £125,140 |
In practice, the impact of the starter and basic band increases will be small for most Scottish employees—but it’s a genuine, if modest, tax cut.
If you have employees across both Scotland and the rest of the UK, make sure your payroll is applying the right tax codes and rates per employee location.
National Insurance contributions for 2026/27
After the significant changes to employer NI in 2025/26—when the rate rose to 15% and the secondary threshold dropped to £5,000—things are broadly settled for 2026/27. There’s no further rate change, and the secondary threshold remains frozen at £5,000 (£417 per month) until April 2031.
Employee (primary) contribution rates
Employee National Insurance rates are slightly different 2026/27. While the main rate of 8% between the primary threshold and upper earnings limit continues to apply for most employees, the lower earnings limit (LEL) has increased slightly. From 2026, it changed from £125 per week to £129 per week. This doesn’t affect contributions directly (employees pay 0% between the LEL and primary threshold) but it does affect eligibility for certain statutory payments—more on that below.
The primary threshold itself is now aligned with the personal allowance at £12,570 per year (£1,048 per month / £242 per week).
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National minimum wage and national living wage
National minimum wage (NMW) rates changed on 1 April 2026—a week before the new tax year. The new rates are:
| Category | Rate from April 2026 | Increase |
|---|---|---|
| National Living Wage (21 and over) | £12.71 | +4.1% (+50 pence) |
| Aged 18 to 20 | £10.85 | +8.5% (+85 pence) |
| Under 18 (above school leaving age) | £8.00 | +6% (+45 pence) |
| Apprentices (under 19, or first year) | £8.00 | +6% (+45 pence) |
The National Living Wage (NLW) increase of 4.1% is more measured than last year’s 6.7%, but it still adds up—particularly for businesses with large numbers of people earning at or near the minimum wage, such as those in retail, hospitality, or facilities management.
The biggest proportional jump is for the 18–20 age group at 8.5%. If your workforce includes a lot of younger employees, this year’s NMW update will have a noticeable impact on your total payroll costs.
Statutory payments for 2026/27
This is probably the section with the most significant changes for 2026/27—especially around statutory sick pay (SSP), which sees a genuinely landmark reform.
Parental pay rates
The weekly rate for all types of parental pay increases from £187.18 to £194.32, applying from 5 April 2026. This covers:
- Statutory Maternity Pay (SMP)—for the remaining weeks after the first 6 weeks
- Statutory Adoption Pay (SAP)
- Statutory Parental Bereavement Pay (SPBP)
- Statutory Neonatal Care Pay (SNCP)
For the first 6 weeks of SMP and SAP, the rate remains 90% of average weekly earnings—so that part is unchanged. The minimum average weekly earnings (AWE) threshold to qualify has also increased, from £125 to £129 per week, in line with the lower earnings limit. For context on the full picture of parental pay rates, it’s worth bookmarking our dedicated guide.
Statutory sick pay
SSP has changed more fundamentally for 2026/27 than in any recent year. Here’s what’s new:
- Rate increase: SSP increases from £118.75 per week to £123.25 per week—or 80% of average weekly earnings if that’s lower.
- LEL requirement abolished: Previously, employees had to earn at least the lower earnings limit to qualify for SSP. That restriction is gone. SSP is now available to all employees, regardless of how much they earn.
- Three-day waiting period removed: Under the old rules, employees had to be sick for three qualifying days before SSP kicked in. From April 2026, SSP is payable from day one.
These are significant changes. In practice, they mean more employees will now qualify for SSP, and the cost of short-term sickness absence will increase for employers. A realistic example: an employee who works part-time for low weekly earnings and has previously not qualified for SSP will now be entitled to it from their very first day off sick. That’s both the right outcome for employees and a meaningful shift in cost planning for payroll teams.
| Payment type | 2025/26 rate | 2026/27 rate |
|---|---|---|
| SMP/SAP/SPP/ShPP/SPBP/SNCP weekly rate | £187.18 | £194.32 |
| SSP weekly rate | £118.75 flat | £123.25 or 80% AWE |
| Minimum AWE for parental pay | £125/week | £129/week |
| SSP waiting days | 3 days | 0 days (from day 1) |
| SSP earnings threshold | Must earn ≥ LEL | No earnings threshold |
Student loan thresholds for 2026/27
Student loan deductions are another area where staying sharp matters—get the wrong plan applied and employees will either overpay or underpay, both of which cause headaches down the line. Here’s where the thresholds sit for 2026/27, with a notable addition: Plan 5.
| Plan | 2026/27 threshold | 2025/26 threshold | Deduction rate |
|---|---|---|---|
| Plan 1 | 326,900 | £26,065 | 9% |
| Plan 2 | £29,385 | £28,470 | 9% |
| Plan 4 | £33,795 | £32,745 | 9% |
| Plan 5 | £25,000 | New from April 2026 | 9% |
| Postgraduate | £21,000 | £21,000 (frozen) | 6% |
Plan 5 is the most significant addition here. It applies to students who started an undergraduate course in England from August 2023 onwards, and the threshold is frozen at £25,000. Employees on Plan 5 will start repaying at a lower earnings point than those on Plan 2—something worth communicating clearly if you have employees asking questions about their payslip.
Statutory redundancy pay
The maximum weekly rate for statutory redundancy pay in England, Scotland, and Wales rises to £751 from 6 April 2026, confirmed by the Employment Rights (Increase of Limits) Order 2026. This represents an increase from £719, in line with the September 2025 Retail Price Index (RPI) of 4.5%. Northern Ireland’s rate is set separately and is to be confirmed.
This is worth factoring in if you’re planning any restructuring in the new tax year. With the weekly cap now at £751, the maximum statutory redundancy payment a single employee can receive rises to £22,530.
Other payroll updates worth noting for 2026/27
Alongside the major changes above, here are a few other figures to update in your payroll:
Company cars, vans, and mileage
Company car and van benefit charges all increase in line with September’s Consumer Price Index (CPI):
- Van benefit: £4,170 (up from £4,020)
- Van fuel benefit: £798 (up from £769)
- Car fuel benefit multiplier: £29,200 (up from £28,200)
The approved mileage allowance payment (AMAP) rates remain unchanged: 45p per mile for the first 10,000 business miles in a car or van, and 25p thereafter. If your organisation runs a mix of company vehicles and private mileage claims, expense management software makes it easy to track mileage accurately and process reimbursements compliantly.
Key payroll dates for 2026/27
To make sure nothing falls through the cracks, here are the important dates to flag in your calendar:
| Date | What's due |
|---|---|
| 1 April 2026 | New NLM and NMW rates take effect |
| 6 April 2026 | Start of 2026/27 tax year |
| 19 April 2026 | Deadline for final RTI submissions for 2025/26 |
| 31 May 2026 | P60s must be issued to employees |
| 6 July 2026 | P11D return deadline |
| 19 July 2026 | Class 1A NI payment deadline (cheque) |
| 22 July 2026 | Class 1A NI payment deadline (electronic) |
| 19 October 2026 | Class 1B NI payment deadline (cheque) |
| 22 October 2026 | Class 1B NI payment deadline (electronic) |
Make your 2026/27 payroll run smoothly from day one
There’s a lot to keep on top of at the start of a new tax year. The good news is that if you’re using our payroll software, all the new rates and thresholds for 2026/27 are built in as standard—so there’s no manual updating to worry about. You just run your payroll with the confidence that the figures are right. If you’d like to see how Cintra handles all of this in practice, book a demo today!
Payroll Legislation Guide
The facts, figures, thresholds and allowances for 2026/27 spanning tax, National Insurance, pensions, statutory payments and more.
