For many employers, payroll is something that only gets attention when a problem arises. Unfortunately, by the time an issue appears in payslips, HMRC reporting, or employee queries, it can already be costing time, money, and confidence.
That is why it is worth reviewing the HMRC payroll changes for 2026/27 before the new tax year begins.
While this is not a year of major payroll reform, there are still several important updates that employers in England need to prepare for. These include higher National Minimum Wage rates, changes to Statutory Sick Pay, increased statutory family pay, and the introduction of student loan Plan 5. At the same time, several core payroll settings remain unchanged, which can make it easy to miss the changes that do matter.
What stays the same in 2026/27
Some of the main payroll rates remain unchanged for the new tax year.
The employee National Insurance rate remains 8%, and the employer National Insurance rate remains 15%. Employment Allowance also stays at £10,500. (GOV.UK)
The main PAYE income tax thresholds for England also remain unchanged:
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Personal Allowance: £12,570
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Basic rate band: £37,700
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Higher rate: £37,701 to £125,140
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Additional rate: over £125,140 (GOV.UK)
That stability is helpful, but it should not create a false sense of security. Even in a relatively steady year, payroll errors still happen when systems are not updated properly.
The key HMRC payroll changes for 2026/27
National Minimum Wage increases from 1 April 2026
One of the most important annual payroll changes is the increase in National Minimum Wage. The new rates apply from 1 April 2026, just before the start of the 2026/27 tax year. (GOV.UK)
The new hourly rates are:
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£12.71 for workers aged 21 and over
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£10.85 for workers aged 18 to 20
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£8.00 for workers aged under 18
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£8.00 for qualifying apprentices (GOV.UK)
For employers, this is one of the biggest compliance risks at the start of April. A simple rate check now can help avoid underpayments, corrections, and unnecessary staff concerns later.
Statutory Sick Pay changes are more significant this year
The Statutory Sick Pay update is more than a routine rate increase.
For 2026/27, SSP rises to £123.25 per week. HMRC’s employer guidance also reflects that SSP is payable from the first day of sickness, rather than after waiting days under the previous rules. (GOV.UK)
This means employers should review:
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payroll software settings
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sickness policies
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absence procedures
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manager guidance
This is an area where getting the process right matters just as much as applying the correct weekly rate.
Student loan Plan 5 arrives from 6 April 2026
A major new payroll change for 2026/27 is the introduction of student loan Plan 5.
From 6 April 2026, employers may need to begin making deductions under this new plan type. HMRC confirms that Plan 5 will be operated in the same way as Plans 1, 2 and 4, with an annual threshold of £25,000 and deductions at 9% of earnings above the threshold. (GOV.UK)
The full annual thresholds are:
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Plan 1: £26,900
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Plan 2: £29,385
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Plan 4: £33,795
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Plan 5: £25,000
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Postgraduate loan: £21,000 (GOV.UK)
This is especially important for onboarding and new starter checks. If your payroll software or starter procedures are not ready, it is easy for deductions to be missed or applied incorrectly.
Statutory family pay rates also increase
The flat weekly rate for statutory family-related pay rises to £194.32 where the flat rate applies. This includes:
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Statutory Maternity Pay
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Statutory Paternity Pay
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Statutory Adoption Pay
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Shared Parental Pay
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Statutory Parental Bereavement Pay
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Statutory Neonatal Care Pay (GOV.UK)
For employers, this is a straightforward annual update, but it should still be built into payroll settings, budgeting, and HR documentation.
Benefits in kind: still not mandatory to payroll in 2026/27
Many employers have been expecting mandatory payrolling of benefits in kind, but HMRC’s current guidance says this will apply from April 2027, not during the 2026/27 tax year. For most benefits and taxable expenses, reporting through RTI in real time starts from April 2027. (GOV.UK)
That means most employers should continue with their current benefits reporting process for 2026/27 unless they already payroll benefits voluntarily.
This gives businesses extra time to prepare, but it is sensible to use that time well rather than leave changes until the last minute.
Why this matters for your business
Payroll mistakes do not just create admin. They can lead to:
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incorrect payslips
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staff frustration
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HMRC queries
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avoidable corrections
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wasted management time
A quick review before the first payroll run of the new tax year is often far easier — and far cheaper — than fixing errors afterwards.
How we help employers stay compliant
We help businesses make sure payroll is accurate, compliant, and properly set up for the year ahead.
That can include:
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checking payroll software settings
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reviewing tax, NI and student loan setup
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checking SSP and statutory pay treatment
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identifying risks before they become problems
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giving practical support if you do not have an in-house payroll specialist
Whether you run payroll internally or outsource parts of the process, a professional review can provide reassurance that everything is operating as it should.
Final thought
The HMRC payroll changes for 2026/27 may not look dramatic, but they still matter. For many employers, the key issues will be the National Minimum Wage increase, day-one Statutory Sick Pay, and the introduction of student loan Plan 5.
If you would like peace of mind before the new tax year begins, reviewing your payroll setup now can help you avoid errors, reduce employee queries, and stay compliant from day one.
Suggested call to action
Need help preparing for the 2026/27 payroll changes? We can review your payroll setup, highlight any risks, and help you make sure everything is ready before the first April payroll run. Get in touch for practical, reliable support tailored to your business.
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