2. Review National Insurance settings
National Insurance is one of the areas most likely to cause payroll errors if thresholds or employee categories are incorrect. Employers should check whether any employees fall into special categories, such as under-21s, apprentices under 25 or employees over State Pension age.
3. Check National Minimum Wage rates
National Minimum Wage rates changed from April 2026:
- Age 21 and over: £12.71 per hour
- Age 18 to 20: £10.85 per hour
- Under 18 but above compulsory school leaving age: £8.00 per hour
- Apprentices under 19: £8.00 per hour
- Apprentices aged 19 and over in the first year of apprenticeship: £8.00 per hour
Employers should check all pay rates, especially where employees have had birthdays that move them into a new rate band. It is also important to consider working hours and deductions as these can affect minimum wage compliance.
4. Review statutory family pay
For Statutory Maternity Pay, the first six weeks are payable at 90% of average weekly earnings. The remaining weeks are paid at £194.32 or 90% of average weekly earnings, whichever is lower. This is the same rate for for Paternity Pay, Adoption Pay and Shared Parental Pay.
5. Understand the new Statutory Sick Pay rules
From 6 April 2026, changes introduced by the Employment Rights Act 2025 mean:
- SSP is payable from the first full day of sickness absence, rather than from day four;
- the Lower Earnings Limit has been removed for SSP purposes;
- eligible employees are entitled to SSP regardless of income;
- SSP is paid at £123.25 per week or 80% of average weekly earnings, whichever is lower.
HMRC has confirmed that the new rules apply to sickness absences starting on or after 6 April 2026.
6. Check student loan and postgraduate loan deductions
Student loan deductions can easily be missed, particularly when employees start a new job or changes loan plan.
For 2026/27, the annual thresholds are:
- Plan 1: £26,900
- Plan 2: £29,385
- Plan 4: £33,795
- Plan 5: £25,000
- Postgraduate loan: £21,000
Student loan deductions are made at 9%, while postgraduate loan deductions are made at 6%.
7. Check Employment Allowance
Employment Allowance allows eligible employers to reduce their annual National Insurance liability. For 2026/27, the Employment Allowance is £10,500. Employers should check eligibility and ensure payroll software is applying the correct treatment.
8. Prepare for Employment Rights Act changes
The Employment Rights Act 2025 introduces changes to employment law during 2026 and 2027 and employers should start preparing now.
Changes already relevant from April 2026 include the new SSP rules, day-one Paternity Leave, Bereaved Partner’s Paternity Leave, changes affecting Shared Parental Leave.
Employers should also prepare for changes expected from 1 January 2027, including a reduction in the qualifying period for ordinary unfair dismissal protection from two years to six months.
Practical steps for employers to do now include reviewing sickness absence policies, updating family leave and bereavement leave policies, checking employee handbooks, reviewing probationary periods and training managers on absence, leave and dismissal processes.
9. Keep accurate payroll and HR records
Good records help employers deal with payroll queries, support compliance and respond to HMRC if information is requested. With payroll and employment law changes taking effect, accurate record-keeping is especially important.
At Dominic Hill Associates, we can help ensure your payroll is set up correctly and your business remains compliant with HMRC requirements. If you would like support with payroll, PAYE please contact us on info@dominichill.co.uk