UK Payroll Changes 2026/27: Key Updates and Deadlines

UK Payroll Changes 2026/27: Key Updates and Deadlines

This tax year, HR teams need to be aware of UK legislation changes that will impact how payroll is run. These include higher minimum wages, changes to student loan repayments, and updated National Insurance (NI) thresholds. These adjustments are in addition to the usual annual tax year updates and ongoing compliance requirements.

It’s important to understand the new requirements, as they’ll directly affect the way your payroll and HR teams will calculate pay and your business’s ability to remain compliant with UK employment laws and regulations. If your organisation misses implementing these changes, you can run into significant risks, such as staff underpayments, reporting errors, and potential penalties.

In this guide, we’ll share what’s changing, what it means in practice, and how your team can stay compliant.

Key takeaways

• Payroll is becoming a more real-time process with ongoing reporting requirements

• 2026 is mainly a year of preparation before the big proposed changes in 2027

• There are more rules to apply across different employees

The key changes you need to know

If you’re managing payroll in the 2026–2027 tax year, you’ll need to be thoroughly familiar with the following updates to payroll rules. Each of these will require you to update your systems to ensure contributions are being calculated correctly and comply with payroll legislation.

National Insurance

The Lower Earnings Limit (LEL) has increased to £129 per week, meaning employees need to earn at least this amount for their earnings to count towards NI records and benefits like the State Pension.

Read the official NI update here.

National Minimum Wage

The National Minimum Wage has increased to £12.71 per hour for those aged 21 and over, £10.85 for those aged 18–20, and £8.00 for under-18s and apprentices.

In addition, the accommodation offset is increasing to £11.10 per day for employers who provide housing.

Read the official minimum wage update here.

Student loan deductions

All student loan thresholds have been updated, and a new plan type, Plan 5, is being introduced for newer borrowers. Plan 5 has a lower repayment threshold of £25,000, meaning deductions will start earlier for affected employees. 

Payroll teams will also begin receiving new SL1 notices from HMRC. They must ensure employees are assigned to the correct plan, as applying the wrong plan will result in incorrect deductions.

Read the official student loan update here.

Payroll reporting and software

Payroll reporting requirements are shifting, with HMRC moving toward mandatory payrolling of benefits. This means benefits will be taxed through payroll in real time each pay cycle, rather than reported annually through P11D forms.

Read the reporting update here.

The 2026/27 UK payroll dates you need to know

Now that we’ve covered the major changes, get your calendar out to mark the key dates to remember, including filing deadlines. Here are the new changes and regular key dates to be aware of:

• 1 April 2026: New minimum wage comes into effect

• 5 April 2026: End of the 2025/26 tax year

• 6 April 2026: Start of the 2026/27 tax year, when new rules come into play

• 31 May 2026: Deadline to issue P60s to employees

• 6 July 2026: Deadline to submit P11D and P11D(b) forms

• 19 July 2026: Deadline to pay Class 1A NICs (postal)

• 22 July 2026: Deadline to pay Class 1A NICs (electronic)

A closer look at NI and PAYE system changes

From 6 April 2026, you’ll need to update your payroll settings with the latest NI thresholds and rates for the new tax year. This is the usual April reset, but it’s worth double-checking everything before your first pay run to avoid any issues.

NI payment thresholds

*Data from the UK government, April 2026

National Insurance contributions

*Data from the UK government, April 2026

The right payroll software can help you navigate these changes easily. Platforms like Rippling automatically apply HMRC updates to rates, thresholds, and reporting rules, ensuring compliance with the latest requirements without manual changes.

The latest minimum wage requirements for UK businesses

From 1 April 2026, you’ll need to ensure you’re paying all your staff at or over the national minimum wage. This will need to be updated across contracts and payroll systems. 

National minimum wage rates (from 1 April 2026)

*Data from the UK government, April 2026

These are the rates that need to be applied from the first April pay run. It’s also a good idea to communicate such changes to your employees in advance so they know what to expect.

Mandatory payrolling of benefits has been delayed to 2027

Benefits in kind (BiKs), such as company cars or private medical insurance, are moving to real-time reporting through payroll, but the mandatory rollout has been pushed back to April 2027 to give employers and software providers more time to prepare.

This means the current process, including P11D reporting, remains in place for 2026, but payroll teams should start preparing for the shift to taxing benefits through payroll each pay cycle. 

The new Fair Work Agency (FWA)

The new enforcement body, the Fair Work Agency (FWA), is being established from April 2026. The agency's role is to tighten how employment rights are enforced across areas like minimum wage, statutory, and holiday pay entitlements. 

For businesses that are paying their employees fairly, this shouldn’t impact their payroll. However, it’s important to know that if mistakes are made, this agency could pursue your business, as they have enforcement power. This includes conducting payroll compliance audits and workplace inspections, issuing civil penalties for underpayments, and taking legal action against employers who fail to comply.

What to prepare for in 2027

While 2026 brings the first wave of changes, 2027 could introduce broader employment law reforms. These aren’t confirmed yet, but they’re likely to impact payroll compliance if implemented. 

Here’s what’s on the table for 2027:

Expansion of unfair dismissal rights

If the new proposal is passed, employees could claim unfair dismissal after six months of service (down from two years), increasing the compliance risk around terminations. This means new starters would gain protection much sooner, and dismissal processes would need to be compliant earlier.

A crackdown on “fire and rehire” practices

Dismissing employees and then rehiring them on worse terms could be heavily restricted. In practice, employers won’t be able to use this approach to change contracts unless very specific conditions are met.

Mandatory payrolling of benefits

This is a confirmed change. BiKs are moving fully into payroll, replacing P11D reporting from April 2027. This means you’ll no longer need to report benefits at the end of the year.

Stronger protections for pregnancy and maternity

Additional safeguards could be added to protect pregnant employees and those returning from leave against dismissal. If this goes through, employers will face stricter rules and a higher risk if dismissals occur during or shortly after these periods.

New rights for zero-hours workers

Employees could soon be able to request guaranteed hours and compensation for cancelled or changed shifts if this proposed change comes into law.

Statutory bereavement leave

In 2027, employees could have a legal right to take (unpaid) time off following a bereavement, which employers would be required to accommodate.

Flexible working changes

This would require employers to provide clear, valid reasons when rejecting flexibility requests, with more structured requirements.

Updated redundancy rules

Proposed changes could expand how collective redundancy thresholds are calculated, shifting the assessment from individual sites to across the whole organisation.

Mandatory gender pay gap and menopause action plans

The action plan started as voluntary in 2026, and proposals suggest it could become a legal requirement from 2027. If introduced, employers with 250 or more employees would need to formally document and report how they are addressing these issues.

Applying the latest payroll changes

There’s plenty that's changing this year, but it doesn’t have to be overwhelming. The changes mostly come down to keeping your systems up to date and double-checking everything has been applied properly from that first April pay run. 

The catch is that the more systems you're working across, the more room there is for mistakes. Rippling's research found that 45% of teams need more than three separate tools just to update someone's role, pay, or benefits, so when rates and thresholds shift, those changes have to be made in several places at once.

If you want to make these yearly changes simpler, platforms like Rippling take the manual work off your plate. It keeps payroll, HR, and scheduling in one place and applies HMRC updates automatically, helping you stay on top of everything and meet payroll reporting requirements without constantly double-checking. 

If you're looking to update your payroll and HR software this tax year, book a free Rippling demo to get started.

FAQs

What is the UK's minimum wage in 2026?

As of 1 April 2026, the minimum wage in the UK is £12.71 per hour. For those between 18 and 20 it’s £10.85, and for under 18s and apprentices it's £8.00. 

It’s interesting to note that this is lower than what is considered a wage someone can live on in the UK. For 2025–2026, the estimate is £14.80 in London and £13.45 in the wider UK.

Will Personal Allowance go up in 2026?

No, it won’t. Personal Allowance is currently frozen at £12,570, and it should remain there until at least 2030 or 2031. This means anything you make under £12,570 won’t be taxed. This shouldn’t be confused with the £1,000 trading allowance, which only applies to those making a small side income. 

What is Plan 5 for student loans?

Plan 5 is a new repayment plan for people who studied in England from 2023 onwards. They will need to repay 9% (the same as other plans) on anything they earn over £25,000. Those who studied in Scotland are under Plan 4, which means repayments start over £32,745.

Do I still need to do P11D forms?

Yes. You’ll still need to submit P11D forms for the 2026/27 tax year, with the deadline in July 2027. Mandatory payrolling of benefits starts from April 2027, so P11Ds will no longer be required for the 2027/28 tax year onwards.

Are the changes the same in Scotland?

Mostly, yes. Payroll changes, like those to the NI and minimum wage, apply across the UK. However, income tax is set separately in Scotland, so take-home pay may vary.

What is the Fair Work Agency (FWA)?

The FWA is a new UK enforcement body (from April 2026) that checks whether employers are paying their staff correctly. It can investigate and issue penalties if they aren’t.