As we look ahead to the 2026/27 tax year, a number of important updates have been confirmed across National Insurance, statutory payments, National Minimum Wage and student loans.
Below is a summary of the key changes and what they mean for you and your business.
The Secondary Threshold (ST) will remain at £5,000, meaning earnings below this level will not incur employer National Insurance (NI). However, earnings below the Lower Earnings Limit (LEL) do not qualify for NI credits. To ensure eligibility for benefits such as the State Pension, salaries should therefore be set at a minimum of £6,708.
The Primary Threshold (PT) will remain at £12,570, in line with the personal allowance. Earnings between the LEL and PT will not incur employee National Insurance, while still qualifying for credits.
A salary of £12,570 continues to represent a tax-efficient position, as it maximises the personal allowance while only triggering a relatively small employer NI liability of £1,135.50. Both the salary and associated employer NI remain deductible for corporation tax purposes, making this a practical and widely adopted approach.
The Employment Allowance will remain at £10,500 and, where applicable, may reduce or fully eliminate any employer NI liability.
Beyond these thresholds, the most tax-efficient balance between salary and dividends will depend on individual circumstances, so tailored advice is key.
SSP may become payable earlier and to a wider group of employees. This could increase both payroll costs and administration, particularly for employers managing regular short-term absences or larger workforces.
The weekly rate will increase to £194.32 for:
(or 90% of Average Weekly Earnings if lower)
Small Employers’ Relief will increase to 109%.
Businesses may see an increase in statutory payment costs, although eligible smaller employers may also benefit from greater recovery. Reviewing payroll budgets and reclaim processes ahead of time can help avoid surprises.
If your business employs younger workers, apprentices or staff paid at or near minimum wage, these increases may have a direct impact on payroll costs. It may also be a good time to review pay differentials across the wider workforce.
Thresholds will be updated across Plans 1–5, with Plan 5 becoming the default repayment plan in England from April 2026.
It is important that payroll systems are updated correctly to ensure deductions are applied accurately and employees are paid correctly.
Payroll teams should check that systems, software and employee records are up to date ahead of the new tax year. Incorrect deductions can create issues for both employers and employees if changes are missed.
While some of these changes may appear minor in isolation, their combined impact can be significant. Reviewing your payroll arrangements now can help reduce the risk of errors, support better planning and ensure your business remains compliant as the new tax year begins.
At Hall Morrice, we know that even small changes can have a wider impact on payroll, cash flow and long-term planning. Whether you need support reviewing salary levels, understanding the impact on employer costs or ensuring your payroll is set up correctly for the year ahead, our team is here to help.
Speak to our payroll team at payroll@hall-morrice.co.uk to discuss what these changes mean for your business.
