Essential updates for employers: Spring 2026

Here, we explain the crucial updates and developments affecting employers and employees in the UK. Whether you’re an experienced employer or just starting out, this guide aims to equip you with the knowledge and tools needed to thrive amid the evolving landscape of UK employment law and regulations.

Major changes to Statutory Sick Pay 

Statutory Sick Pay (SSP) has 3 major changes from April 2026 that will impact employers and employees. 

1. No more ‘waiting days’ 

Prior to April, employees had to be off sick for three working days before SSP was payable. These were known as ‘waiting days’. 

The new rules, brought in as part of the Employment Rights Acts 2025, have removed the waiting days requirement. This means that SSP is now payable from the first day of absence, even when employees are off for just one day. 

2. Removal of Lower Earnings Limit condition 

Previously, employees needed to earn at least £125 per week – the Lower Earnings Limit for 2025/26 – to be entitled to SSP. This has now changed and all employees will be able to receive SSP no matter how much or how little they earn. 

3. Change to SSP rate and calculation 

The old rate of SSP was paid as a flat rate of £118.75 per week, for those who qualified. 

The new rate of SSP employees will receive is £123.25 per week, or 80% of their average weekly earnings, whichever is lower. This means that lower paid employees will receive SSP proportional to their income. 

The changes mean that more employees will be entitled to receive SSP from their employers and employees will receive it sooner than before. 

Statutory pay funding increase for small employers from April 2026 

Small Employers Relief is funding available to employers when their employees are in receipt of one of the Statutory ‘Parental’ Pays. This includes: 

What funding is available? 

As of April 2026, up to 109% of the statutory pay can be reclaimed by the employer. For small employers this is 100% of the cost as a reimbursement, plus a further 9% as compensation. A ‘small employer’ is defined by HMRC as having paid £45,000 or less in Class 1 NICs in the previous tax year. Employers that have paid total NICs over this threshold can reclaim 92% of the statutory pay. 

Example 1: 

Jane has received £1,000 in Statutory Maternity Pay this month. 

As a small employer, her employer is entitled to reclaim £1,090 as a result. 

Example 2: 

John has received £500 in Statutory Paternity Pay this month. 

His employer is not a small employer, and so can only reclaim £460 of the cost. 

How do employers receive the funding? 

Small Employers Relief is paid to employers via their payroll. It is deducted from the value of PAYE and NICs that the employer must pay over to HMRC, and so they will pay less to HMRC as a result. Where employers do not owe any PAYE & NICs to HMRC, they can apply directly to HMRC’s PAYE Employer Office for a refund at the start of the following tax year. 

This can be particularly helpful for employers to alleviate cashflow concerns which may have arisen by having to pay an employee while they are not at work, alongside a temporary replacement. 

Increase to National Minimum Wage and National Living Wage 

National Minimum Wage (NMW) and National Living Wage (NLW) rates have increased as of 1st April 2026.  

The new rates are as follows: 

Age April 2025 April 2026
NLW 21 & over  £12.21 £12.71
NMW 18-20  £10.00 £10.85
NMW 16-17  £7.55 £8.00
Apprentice Rate £7.55 £8.00

The increase in rate is applicable from the first full pay period following 1st April 2026. For employers who adhere to a calendar month pay period this will be simple, but for employers who pay mid-month or weekly pay periods, they may need to take care to ensure rates are updated at the correct time. 

Example: 

An employer with a pay period of 1st – 30th April. 

The NLW or NMW rate increase will come into effect on the pay period starting 1st April 

An employer with a pay period 15th March – 14th April.  

The NLW or NMW rate increase will come into effect on the pay period starting 15th April. 

Employers should take care ensuring that their employees are paid the correct hourly rate, as penalties from HMRC can be substantial and include being published on a ‘naming and shaming’ list online. 

Impact of State Pension Age changes on National Insurance Contributions 

From 6th April 2026, an increase to the State Pension Age (SPA) from 66 to 67, starts to come into effect for people born on or after 1st April 1960.  

When someone reaches SPA, they are no longer required to pay employees’ National Insurance Contributions (NICs). The changes mean that employees will pay NICs for longer. 

What should employers do when an employee reaches SPA? 

First, an employer needs to obtain proof of the employee’s date of birth. They should ask to see one of the following to confirm: 

Once the employer has confirmed the employee has reached SPA, they will need to update their payroll records. The employees’ National Insurance category should change to C, which will mean they will no longer pay employees’ NICs.  

Employer’s NICs will continue to be payable by the employer in the usual way. 

New Student Loan Plan 5 

HMRC have introduced a new student loan repayment category, Plan 5, which comes into effect from 6th April 2026. 

Plan 5 applies to  students in England who started their studies on or after 1st August 2023. It is for students who have studied an undergraduate course, Postgraduate Certificate of Education (PGCE) or have taken out an Advanced Learner Loan. 

Plan 5 student loans will start to be deducted from employees’ payslips from 6th April 2026. 

What will employees pay and when? 

Repayments begin when an employee’s pay reaches the threshold of either £480 a week, £2,083 a month or £25,000 a year. The rate of repayment is 9% of earnings over the threshold. 

Example: 

Chloe earns £3,000 in April 2026.  

As Chloe’s pay is over £2,083 this month, she will pay £82.53 in student loan repayment 

i.e. £3,000 - £2,083 = £917 

£917 x 9% = £82.53 

How should employers prepare for the change?

Employers need to use the latest version of HMRC's starter form, which includes plan 5 student loan as an option for their employees, to ensure they are collecting the correct data from new employees. 

Employers should also look out for Student Loan Start (SL1) and Student Loan Stop (SL2) notices from HMRC, which provide an update to employee’s circumstances regarding repayments. 

How TaxAssist Accountants can help  

If you would like some support, we can help with all your payroll needs. Contact us today on 0131 322 3988 or use our online contact form.    

 

Last updated: 8th April 2026