2025/26 Payroll Changes

As the new tax year begins, employers should take note of several significant updates. From increases in minimum wage to updates on statutory payments, these changes could impact your payroll and planning for the year ahead. Discover the key points, with links to more detailed guidance if you need it.

Minimum Wage

The minimum wage in the UK will rise on 1st April to the following rates:

Apprentice

£7.55 per hour

Under 18

£7.55 per hour

18 to 20

£10.00 per hour

21 and Over

£12.21 per hour

Remember that these rates come into effect from the 1st April and not the new tax year (6th April).

For more information please consult the following web page; https://www.gov.uk/national-minimum-wage-rates

Real Living Wage

The Living Wage Foundation, who set a real “Living Wage” for the UK announced its figures for the 2025/26 tax year back in October.

Living Wage

£12.60 per hour

Living Wage London

£13.85 per hour

Employers who are accredited to the scheme have a period of 6 months to implement the change to maintain their accreditation.

For more information, please consult the following web page; https://www.livingwage.org.uk/what-real-living-wage

NI

During the Autumn Budget it was announced that there would be changes to National Insurance, coming into effect from 6th April 2025.

It was confirmed that there would be a reduction of the Secondary Threshold, with Employer’s not paying National Insurance from lower thresholds (£96 Weekly, £417 Monthly or £5,000 Annually). As part of the changes, the Chancellor also announced that the Employers NI percentage would be increasing by 1.2% to 15% (from 13.8%) for earnings above the Secondary Threshold.

The Lower Earnings Limit was slightly increased to be £125 per Week, £542 per Month and £6,500 when Annualised.

Employment Allowance

The £100,000 eligibility threshold for the Employment Allowance was removed by the UK government in the Autumn Budget 2024. This change will take effect from April 6, 2025.

The Employment Allowance will be increased to protect the smallest businesses by providing more relief of up to £10,500 a year on their employer secondary Class 1 NICs liabilities, up from £5,000 in the previous tax year.

Statutory Payments

For Statutory Payments, in line with the Lower Earnings Limit increase, the eligibility criteria for Statutory Payments has been raised to mirror this, £125 per week.

Statutory Sick Pay

Eligible employees will receive £118.75 per week, a raise from £116.75. This is split down into unrounded daily rates depending on number of working days for an employee.

Statutory Neonatal Care (SNP)

From the 2025/26 tax year there will be an introduction of Statutory Neonatal Care. This new statutory leave and payment will provide new parents with a day-one right to take leave from their employment to care for their babies whilst ill in hospital.

It is applicable to parents with babies who are admitted to neonatal care up to 28 days olds, and that have a continuous stay in hospital of seven full days or longer.

This new type of leave will provide parents with 12 weeks of leave, where the eligibility criteria is met, and they will receive statutory payment throughout the leave.

This leave is in addition to any other leave that parents may be entitled to, i.e. Statutory Maternity or Paternity Pay, statutory payments will be recoverable through the payroll at the standard rates.

SNP will be paid at £187.18 or 90% of the Employee’s average weekly earnings, whichever is lower.

Statutory Maternity and Paternity Pay

The standard rate for both these types of leave is increasing to £187.18 or 90% of the Employee’s average weekly earnings, whichever is lower.

The first 6 weeks of SMP remains at 90% of the Employee’s average weekly earnings.

For more information on the rates and thresholds for the new tax year please consult the following web page; https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2025-to-2026