From April 2026, UK employers enter a new tax year with updated statutory pay rates, earnings thresholds and payroll parameters. While none of these changes alter core employment rights, they directly affect wage costs, sickness absence budgeting and payroll compliance.
For small businesses, the risk is not misunderstanding the law, but missing a rate change, applying the wrong threshold or relying on outdated payroll settings. The Government’s “Rates and thresholds for employers 2026 to 2027” guidance sets the framework for the tax year. Statutory pay rates sit alongside it and need to be applied in parallel.
National Minimum Wage rates from April 2026
Minimum wage increases take effect from 1 April 2026. These rates apply regardless of business size and override any lower contractual pay.
Minimum wage rates
| Worker category | Hourly rate from 1 April 2026 |
|---|---|
| National Living Wage (age 21 and over) | £12.71 |
| National Minimum Wage (age 18 to 20) | £10.85 |
| National Minimum Wage (age 16 to 17) | £8.00 |
| Apprentice rate | £8.00 |
These increases typically affect entry-level roles, part-time staff and apprentices first. Small employers should also consider knock-on effects where differentials between roles have historically been maintained.
Accommodation offset
| Item | Rate from 1 April 2026 |
|---|---|
| Accommodation offset | £11.10 per day |
This matters for businesses that provide accommodation and offset it against pay for minimum wage purposes. Using the wrong offset can result in underpayment, even where headline pay rates look compliant.
Statutory Sick Pay and family pay from April 2026
Statutory payment rates increase from 6 April 2026. These changes apply partway through the first payroll month of the tax year, which is where errors commonly occur.
Statutory Sick Pay
| Item | Rate from 6 April 2026 |
|---|---|
| Statutory Sick Pay | £123.25 per week |
| Lower Earnings Limit for SSP eligibility | £129 per week |
Employees earning below the Lower Earnings Limit do not qualify for SSP. For small employers with variable-hours staff, this threshold remains a critical eligibility check.
Statutory family-related pay
| Item | Rate from 6 April 2026 |
|---|---|
| Statutory maternity, paternity, adoption, shared parental, parental bereavement and neonatal pay | £194.32 per week |
| Lower Earnings Limit for eligibility | £129 per week |
These rates apply after any higher-rate statutory periods, such as the initial six weeks of statutory maternity pay.
Payroll thresholds for the 2026 to 2027 tax year
The Government’s “Rates and thresholds for employers 2026 to 2027” guidance sets the payroll framework for the entire tax year. These figures do not change statutory pay entitlements, but they determine tax and National Insurance calculations.
Key National Insurance thresholds
| Threshold | Weekly amount (2026/27) |
|---|---|
| Lower Earnings Limit | £129 |
| Primary Threshold | £242 |
| Secondary Threshold | £96 |
These thresholds affect when employee and employer National Insurance contributions start to apply.
Income tax position
For the 2026 to 2027 tax year, the main income tax settings used in payroll calculations remain unchanged. This does not remove the need for payroll checks, because employees can still see changes in take home pay where thresholds, National Insurance settings or pay rates shift, even if income tax rates stay the same.
| Income tax item | Position for 2026 to 2027 |
|---|---|
| Personal allowance | £12,570 per year |
| Basic rate | 20 percent |
| Higher rate | 40 percent |
| Additional rate | 45 percent |
Practical implications for employers
The 2026 changes do not introduce new concepts. The risk lies in applying old figures into a new tax year.
Payroll software should be updated for both 1 April and 6 April changes. Employers remain responsible for compliance even where payroll is outsourced.
Minimum wage increases should be factored into cash-flow planning early, particularly where staffing costs form a high proportion of operating expenses.
Clear internal guidance helps avoid confusion where employees compare payslips before and after April and assume errors where rates have changed mid-month.
Key takeaways for the 2026 to 2027 tax year
For small businesses, the most important point is that April 2026 involves two separate sets of changes with different start dates. Minimum wage increases take effect from 1 April 2026, while Statutory Sick Pay, statutory family pay and payroll tax thresholds apply from 6 April 2026. Using the wrong rate across these dates is one of the most common causes of underpayment and payroll error.
The Lower Earnings Limit increases to £129 per week and continues to play a central role in determining entitlement to statutory payments and National Insurance treatment. Payroll thresholds for income tax and National Insurance apply from the start of the new tax year on 6 April 2026 and should be reflected in payroll systems from the first pay run that falls within the new tax year. Early checks, clear internal guidance and updated payroll settings materially reduce compliance risk and help avoid disputes over pay, sickness absence and statutory entitlements.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
