The new tax year is now in full swing, and several key payroll changes introduced in April 2026 are already in effect. These updates apply to businesses of all sizes, so it’s important to understand what they mean for you.

Below, we’ve broken down the key updates in a simple Q&A format.

 

Q: What’s changing with Statutory Sick Pay (SSP)?

From 6 April 2026, significant changes are being introduced to Statutory Sick Pay:

• SSP will now be payable from the first day of sickness, removing the current waiting period.
• The lower earnings limit is being removed, meaning all employees, regardless of how much they earn – will now qualify.

This change increases accessibility to SSP and may lead to higher costs for employers, particularly those with lower-paid or part-time staff.

 

Q: Is the SSP rate increasing?

Yes, the SSP rate is rising.

• The weekly rate will increase from £118.75 to £123.25.

While the increase is modest, combined with the removal of waiting days, employers may notice a higher overall SSP cost.

 

Q: What are the new National Minimum and Living Wage rates?

The updated hourly rates for 2026/27 are:

• Aged 21 and over: £12.71
• Aged 18–20: £10.85
• Aged 16–17: £8.00
• Apprentice rate: £8.00

These are the legal minimum rates that must be paid to eligible workers, regardless of business size. They apply to full-time, part-time, and temporary employees.

 

Q: What is Small Employers’ Relief (SER), and who qualifies?

Small Employers’ Relief helps eligible businesses recover the cost of statutory parental payments.

You may qualify if your business has £45,000 or less in annual Class 1 National Insurance contributions.

If eligible, you can:

• Reclaim 100% of statutory payments (e.g. maternity, paternity, adoption pay)
• Receive an additional 3%–9% compensation

Claims are made through your Employer Payment Summary (EPS).

 

Q: What if my business doesn’t qualify for SER?

If you don’t meet the criteria for Small Employers’ Relief, you can still reclaim:

• 92% of statutory parental payments

Additionally, if cash flow is a concern, you can apply to HMRC for an advance payment up to four weeks before the first payment is due.

 

Q: What is the Employment Allowance for 2026/27?

The Employment Allowance remains at:

• £10,500 per year

Eligible employers can reduce their annual employer Class 1 National Insurance liability by up to this amount.

 

Q: How do I claim Employment Allowance?

You can claim the allowance via your payroll software by submitting an Employer Payment Summary (EPS).

Remember:

• You must reconfirm your eligibility each tax year
• The allowance will automatically reduce your monthly PAYE liability once applied

Q: Are all businesses eligible for Employment Allowance?

Not all businesses qualify. For example:

• A company with two or more directors and no employees can claim
• A sole director with no other employees cannot claim

The allowance is particularly valuable for small and growing businesses, as it helps reduce ongoing payroll costs.

 

Final Thoughts

The 2026/27 payroll changes introduce both opportunities and additional responsibilities for employers. While measures like expanded SSP eligibility may increase costs, reliefs such as Employment Allowance and Small Employers’ Relief can help offset the impact.

 

Need Support with Payroll Changes?

Keeping up with payroll legislation can be time-consuming, and getting it wrong can be costly. At Harrison Hinchliffe, we support businesses of all sizes with compliant, efficient payroll solutions tailored to your needs.

If you’d like help preparing for the 2026/27 changes or want to review your current payroll setup, get in touch with our team today. We’re here to make payroll simple, accurate, and stress-free.