6 April marks the beginning of a new tax year, which commonly brings with it a range of new rules and thresholds. This year is no exception, with plenty for employers and employees to keep on top of – here’s a handy summary of some key changes.
Good news for reimbursed expenses
The new tax year brings welcome simplification of the rules for some reimbursed expenses. From this tax year, if an employee pays for a flu vaccine, an eye test, or home-working equipment, their employer will be able to reimburse them for the cost without either employer or staff member incurring tax or NIC liabilities.
Under previous rules, the employer generally had to pay for these items directly (or in some cases provide a voucher) in order to prevent tax and NIC complications arising.
Bad news for home-workers
Employees who work from home can no longer claim tax relief from HMRC for additional costs of home-working (commonly based on a £6 per week ‘flat rate’).
From 6 April 2026, employers can still reimburse their employees tax-free for additional home-working costs, but for employees who work from home and whose employers do not offer this reimbursement, it will no longer be possible to claim tax relief for additional costs of working at home.
State Pension age rises
From 6 April 2026, the State Pension age is increasing from 66 to 67, for both men and women, with the increase phased in over two years. During this transitional period, employees will reach their State Pension age at 66 and a certain number of months, as follows:
| Date of birth between | State Pension age |
| 6 April and 5 May 1960 | 66 years and 1 month |
| 6 May and 5 June 1960 | 66 years and 2 months |
| 6 June and 5 July 1960 | 66 years and 3 months |
| ……and so on, until | |
| 6 March 1961 and 5 April 1977 | 67 |
Employers will need to ensure they update affected employees’ payroll records to show ‘C’ as the National Insurance contributions (NIC) category in time for the first payment date after the employee reaches State Pension age to prevent employee NIC deductions continuing. HMRC’s State Pension age calculator can provide the relevant State Pension age date, which should help employers identify the payroll run for which the NIC category change will need to be made.
The Employment Rights Act 2025 expands
We’ve previously covered changes implemented by the Employment Rights Act (ERA) 2025 which apply from 6 April 2026, including rights to paternity leave, unpaid parental leave, and Statutory Sick Pay from ‘day one’ of employment.
In addition, the ERA brings new requirements for employers to maintain records of annual leave and pay, including: leave entitlement, amounts carried forward from earlier years, and how holiday pay has been calculated.
Whilst there is flexibility in the ‘manner and format’ an employer chooses to keep these records, they must be kept for a minimum of six years. This additional compliance requirement will be enforced by the newly-created Fair Work Agency, which we covered in March’s Employer Focus.
New Scottish Income Tax thresholds
The Scottish Government has powers to set different tax rates and bands for Scottish taxpayers in respect of non-savings, non-dividend income, which includes salaries. For 2026/27, there are small changes to the thresholds for the basic and intermediate Scottish Income Tax bands, although the rates of Scottish Income Tax remain unchanged.
National Insurance Contributions
The main thresholds and rates for Class 1 NICs for employees and employers are unchanged for 2026/27 – for most employees, the main rate applicable to earnings between £12,570 and £50,270 will be 8%. Above £50,270, Class 1 NIC is due at 2%.
For employers, the rate of Class 1 NICs remains unchanged at 15% on earnings over £5,000 per year. Class 1A NICs also remain payable by employers at 15% on the value of most benefits in kind provided to their employees.
What is new for this year is that voluntary payments of NICs becomes more expensive for some – see our previous article on changes to voluntary NICs for periods spent overseas.
This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.
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