As well as various employment law changes that we have previously covered, there are several tax-related changes that employers will need to apply from 6 April 2026.

New PAYE coding notices

Where HMRC have issued a new PAYE coding notice for an employee via form P9(T), employers should use the most recent code received for the new tax year. Any employees whose PAYE code has not changed should remain on their existing PAYE code, but any week 1 or month 1 markings should not be carried forward.

If an employee believes their PAYE code is incorrect, they should contact HMRC in the first instance so that an updated PAYE code can be issued to their employer. Employers cannot update an employee’s PAYE code until they have been officially told to do so by HMRC.

HMRC have published guidance on tax codes to use from 6 April 2026. 

Statutory Sick Pay (SSP) changes

April 2026 brings several changes to SSP beyond the usual uprating of rates. At the time of writing, SSP is only available to employees earning above the Lower Earnings Limit (currently £125 per week) and employees need to wait until their fourth day of sickness absence to be paid it. 

From 6 April, all employees will be entitled to SSP regardless of the level of their earnings and it will be paid from the first day of absence. Going forward, SSP will be set at 80% of the employee’s average weekly earnings or the fixed amount of £123.25 per week, whichever is lower.

The new changes are expected to increase costs for employers, who are unable to claim SSP paid back from the government. As well as additional costs for the first three days of absence, the new rules may also enable more employees to take sick leave who could not previously afford the cost of taking time off.

Employers will still need to look at an employee’s qualifying days for SSP, as this will affect the days they are paid for and how much SSP should be paid for the days they are off work.

Some employers will pay more than SSP, so they may wish to take time to review employee contracts and staff handbooks to take account of the recent changes to SSP.

Relief for other statutory payments

Whilst SSP costs cannot be recouped from the government, smaller employers can claim relief for other statutory payments such as Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Parental Bereavement Pay, Statutory Neonatal Care Pay and Statutory Shared Parental Pay.

At the time of writing, employers can claim 108.5% of the cost of these statutory payments if they pay £45,000 or less in Class 1 National Insurance (before Employment Allowance) in a tax year. This will be increasing to 109% from 6 April 2026.

Student loan repayment thresholds

Although the rates charged for student loan repayments remain unchanged (9% for undergraduate loans and 6% for postgraduate loans), the thresholds at which repayments start will change from 6 April 2026. The new tax year will also be the first time that repayments under Plan 5 (students who applied to Student Finance England and started their course in August 2023 onwards) will be charged.

The new thresholds that will apply are:

National Minimum / Living Wage payments

The National Living Wage (for employees aged 21 and over) will increase from £12.21 per hour to £12.71 per hour from 6 April 2026.

The National Minimum Wages rates will increase to £10.85 per hour (previously £10 per hour) for 18 to 20 year olds and £8 per hour (previously £7.55 per hour) for 16 and 17 year old and apprentices. An employee is an apprentice if they are under 19, or are over 19 and in their first year of their apprenticeship. The rates for the remainder of the apprenticeship of an employee over 19 are based on the relevant minimum wage for their age.

Extension in National Insurance relief for veterans

Since April 2021, HMRC have operated a zero rate of employer’s Class 1 National Insurance where the employee is a qualifying veteran of the UK armed forces, as we covered previously in Employer Focus. This applies on earnings up to the veteran’s upper secondary threshold (currently £967 per week or £4,189 per month). Eligible employees should be recorded under National Insurance category V on their payroll records.

This special treatment for veterans was originally due to last for five years, but the government has confirmed that this will now be extended until April 2028.

Increases to UK State Pension age

April 2026 will also see the increase in the Stage Pension age for both men and women from 66 to 67, which is being phased in over a two-year period. Employees can check their actual State Pension age using the government’s Check your State Pension age calculator.

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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