Payroll 2026/27 – Rates, allowances and thresholds from 6th April 2026.
With the new tax year 26/27 almost upon us, HM Revenue and Customs (HMRC) has now published the GOV.UK guidance on the rates and thresholds for employers 2026 to 2027.
We summarise the main changes here, but more details can be found by following the GOV.UK link below.
National Minimum Wage
| Age | Hourly Rate 2026/27 | Hourly Rate 2025/26 |
| 21 & above | £12.71 | £12.21 |
| 18-20 | £10.85 | £10.00 |
| Under 18 | £8.00 | £7.55 |
| Apprentices under 19 | £8.00 | £7.55 |
You must be school leaving age, see the government guide lines on school leaving age, to get the National Minimum wage and aged 21 or over to get the National Living Wage. The government website will help you work out minimum wages for different types of work if your employees are not paid by the hour.
There is also the Real Living Wage, and Living London wage, find out more here:
National Insurance Thresholds
– Lower earnings Limit (LEL): £129 per week, £559 per month and £6,708 per year
– Primary Threshold (PT): £242 per week, £1,048 per month and £12,570 per year
– Secondary Threshold (ST): £96 per week, £417 per month and £5,000 per year
– Upper Earnings Limit (UEL): £967 per week, £4,189 per month and £50,270 per year
– Employee’s earnings above PT up to and including UEL: 8%
– Employee’s earnings above UEL: 2%
– Employer’s earnings above ST: 15%
Tax
– UK basic tax rate: 20% on annual earnings above the PAYE tax threshold and up to £37,700
– UK higher tax rate: 40% on annual earnings from £37,701 to £125,140
– UK additional tax rate: 45% on earnings above £125,140
Statutory Payments
– Statutory Maternity Pay: first 6 weeks 90% of the employee’s average weekly earnings from their qualifying period, then 33 weeks at £194.32 or 90% of average weekly earnings whichever is lower.
– Statutory Paternity Pay: £194.32 or 90% of average weekly wage if lower.
– Statutory Sick Pay: Weekly rate is £123.25 or 80% of the employees average weekly earnings, whichever is lower. Waiting days have been abolished and statutory sick pay is paid from the first day of illness.
Pension Rates
Pension % remain at a minimum 5% Employee’s contribution and a 3% Employer’s.
More guidance can be found from GOV.UK here.
Employment Allowance
Personal Allowance
There is no change to the personal allowance which remains at £12,570, and the current tax code will remain at 1257L.
Employment Allowance
The Employment Allowance will remain at £10,500, however, remember that this is not available to companies with just one Director on the payroll.
The Employment Allowance is a potential £10,500 reduction in Employers NI Liability. This could help you in deciding how much salary to pay yourself or your spouse in the next tax year.
For businesses eligible for Employment Allowance, presuming you have no other income we can increase your salary to your personal tax-free allowance for 2026/2027, i.e. £12,570 per annum, which is £1,047.50 per month.
This will trigger a National Insurance bill for your company of £1135.50 per annum respectively. However, this will be reduced to nil by the Employment Allowance that can be claimed.
The extra salary over and above the NI threshold should produce corporation tax relief of at least £1,438.30 per annum.
Full corporation tax relief starting at 19% should be available in your company for this payroll cost.
For the tax year April 2026 to March 2027, you will be able to draw £417.00 per month without attracting any tax or NI. However, to generate a pension credit, your gross salary must be at least £542.00 per month, and if you are unable to claim Employment Allowance, this will generate a small Employers NI liability – remember, to achieve a full state pension, you must have 35 years’ worth of credits*
Veteran Allowance
This relief is only available for 12 consecutive months from the veteran’s first day of civilian employment and entitles the employer exemption from paying national insurance up to the upper secondary level.
The relief is available to all employers of veterans regardless of when the veteran left the regular armed forces, providing they have not previously been employed in a civilian capacity.
Dux Advisory Payroll
With payroll legislation becoming more complex and constantly changing – are you 100% sure your payroll is correct? Are you worried you’ve made mistakes? Does the thought of incurring penalties that you can’t afford worry you?
If you are struggling to keep up with the changes to PAYE, Employment Allowance and the National Insurance contributions please get in touch.
Outsourcing your payroll to us means that you can be confident that you’ve got payroll matters covered.
Our payroll service uses the latest software so that we can offer an efficient and secure service, leaving you to focus on doing what you do best – running your business!
You can also read more about our payroll and other outsourcing services here.
