WFM UK | Payroll UK: New Tax Year 2026/2027

Overview

This article provides a comprehensive overview of the statutory changes and confirmations affecting Payroll and Pension processing for the 2026/2027 tax year. It outlines updated rates, thresholds, system enhancements, and reporting changes to ensure full compliance with the UK Government and relevant devolved authorities.

Key updates include changes to minimum wage, income tax, National Insurance, student and postgraduate loans, Statutory Sick Pay, Statutory Parental Pay, pensions, and other statutory obligations. From April 2026, the article also reflects rates, thresholds, and Payrolling Benefits in Kind (BIK), coinciding with the release of our new BIK module.

System functionality has been updated to incorporate all legislative changes, with most updates effective from 6 April 2026, and National Minimum Wage updates from 1 April 2026. The Payroll and Pension Statutory Information pages have been refreshed for the new tax year, and this article serves as a reference for preparing year-end processing and rolling the portal forward into 2026/2027.

For more information on Payrolling Benefits in Kind, please head to this article.

For more information on new legislation in the 2026/2027 Tax Year, and items we should look out for beyond that, please head to this article.

Contents

• Payroll & Pension Statutory Information Pages
• National Minimum & National Living Wage
  • United Kingdom
  • Jersey
  • Republic of Ireland
• Income Tax
  • England, Wales & Northern Ireland
  • Scotland
• National Insurance
• Employment Allowance
• Apprenticeship Levy
• Student Loans & Postgraduate Loans
• Statutory Sick Pay & Statutory Parental Pay
  • Statutory Sick Pay
  • Statutory Parental Pay
• Pensions (Automatic Enrolment)
• Bank Holidays
• Full Payment Submissions & Employer Payment Summary
  • Full Payment Submission (FPS)
  • Employer Payment Summary (EPS)
• Benefits in Kind (BIK)
• Rolling the Portal Forward into the New Tax Year

Payroll & Pension Statutory Information Pages

Within the Payroll and Pension modules, the Statutory Information pages contain the rates and allowances for the current and previous tax years. These pages are updated annually with the tax year’s rates & thresholds and default to the tax year the module is in. 

Payroll Module Statutory Information Page

• Go to Payroll > Administration > Payroll Statutory Information

Pension Module Statutory Information Page

• Go to Pension > Administration > Pension Statutory Information

National Minimum Wage & National Living Wage

United Kingdom

National Minimum Wage and Living Wage rates have been updated for the United Kingdom, effective from 1st April 2026:

The current rates can also be found here - GOV.UK Minimum Wage Rates

Please note: Remember, updated minimum wage rates are effective from the 1st April 2026, but some employees may not see their minimum wage increase from that date. Updated minimum wage rates apply from the first full period after 1st April 2026.

Jersey

National Minimum Wage rates are reported to be updated for Jersey, effective from 1st April 2026:

Please note: As of 2nd March 2026, this is still being reported as a "proposed" increase. Keep an eye on the Gov.Je - Minimum Wage page.

Republic of Ireland

National Minimum Wage rates for the Republic of Ireland actually increased on 1st January 2026, but are being provided here for clarity.

Income Tax

England, Wales & Northern Ireland

• Income Tax Rates & Thresholds will remain frozen until April 2031 based on the 2025 Autumn UK Budget, for England and Northern Ireland. Wales & Scotland will continue to review each year
• The emergency tax code for 2026/2027 will remain as 1257L
• There will be no tax code uplifts completed for the 2026/2027 tax year
• There is no change to PAYE Income Tax Thresholds, from the 2026/2027 Tax Year and will remain at:

• There is no change to PAYE Income Tax Rates, from the 2026/2027 Tax Year and will remain at (assuming £12,570 personal allowance):

The current rates and thresholds for Income Tax can be found here - GOV.UK Income Tax Rates & Personal Allowances

Scotland

• Scottish Tax codes will continue to be prefixed with the letter S
• Changes for the 2026/2027 Tax Year:
  • No change to the rate of which tax is calculated for any band
  • Assuming £12570 personal allowance:

The 2026/2027 rates and thresholds for Scottish Income Tax can be found here - Scottish Income Tax 2026 to 2027: technical factsheet

National Insurance

• National Insurance Rates & Thresholds will remain frozen until April 2031 based on the 2025 Autumn UK Budget, for the entirety of the United Kingdom.
• The only exception is the increase in the Lower Earnings Limit, rising from £125 to £129
• National Insurance Thresholds:

• National Insurance Rates (Class 1 NIC) (Unchanged): 

The current rates and thresholds for National Insurance can be found here - GOV.UK - National Insurance Rates

Employment Allowance

• There has been no change to the employment allowance for the 2026/2027 Tax Year, and will remain at £10,500 per year, available to all employers since the removal of the £100,000 Secondary NIC test in April 2025.
• The Payroll module was updated in January 2026 to adjust user requirements pertaining to employment allowance and the Employer Payment Summary RTI submission.
• More information on Employment Allowance can be found here

Apprenticeship Levy

• In regard to Payroll, nothing has changed for the 2026/2027 Tax year.
  • More information on Apprenticeship Levy can be found here.
• With that said, outside of payroll, there is ongoing apprenticeship levy reform. More detail is available here.

Student Loans & Postgraduate Loans

• Plan Type 1 annual threshold has been increased from £26,065 to £26,900
• Plan Type 2 annual threshold has been increased from £28,470 to £29,385
• Plan Type 4 (Scotland) annual threshold has been increased from £32,745 to £33,795
• A new Plan Type 5 has been introduced from April 2026, with a threshold of £25,000 calculated at 9%
• Postgraduate Loan annual threshold remains the same
• All Plan Type rates remain the same

Please note: If an employee knows they have a student loan, but not which Plan Type, select Plan Type 5 (replacing Plan Type 1) as the default. HMRC will correct this with an SL1/SL2 as appropriate.

Statutory Sick Pay & Statutory Parental Pay

Statutory Sick Pay

• Statutory Sick Pay is changing dramatically from April 2026; more information is available here.
  • Removal of the use of the Lower Earnings Limit for SSP eligibility
  • Removal of the three waiting days, meaning SSP will be paid from day one
  • Payment of SSP is the lower of the standard weekly rate or 80% of the employee's Average Weekly Earnings
• Standard Weekly Rate of SSP has increased from £118.75 to £123.25

• The daily rate of SSP, determined by qualifying days, is as follows:

More information on Statutory Sick Pay can be found here.

Statutory Parental Pay

• The weekly rate of pay for all Statutory Parental Payments has increased from £187.18 to £194.32
  • The new weekly rate of pay for Statutory Parental Payments is effective from 5th April 2026 (first Sunday of April 2026)
• The Lower Earnings Limit, thus the Earnings Threshold for Parental Pay Eligibility, has increased from £125 to £129
• The reclaim rate for parental pay remains at 92%, but for those who qualify for Small Employers' Relief will now be able to reclaim 109%, which has increased from 108.5%

Please note: Upon rolling over into the tax year 2026/2027, all Statutory Payment Schedules will be regenerated based on the above rates, where applicable.

More information on the different Statutory Parental Leave and Pay types can be found by selecting the Parental Pay Type in the table above.

From 6 April 2026, Statutory Parental Bereavement Leave and Pay regulations have been updated to support new rules for employees in Northern Ireland. More information on this can be found here. Guidance on system configuration is available here.

Pensions (Automatic Enrolment)

There are no changes for the 2026/2027 tax year, with thresholds and rates remaining the same as the 2025/2026 Tax year.

As an advanced notice, it is expected (due to being given Royal Assent) for the Automatic Enrolment Pension Age (22) to be reduced, as well as the removal of the Lower Earnings Level (£120). This will not go ahead from April 2026.

Automatic Enrolment thresholds:

Automatic Enrolment minimum qualifying contribution rates:

For example:

Certified Pension Scheme minimum rates:

Please note: If you require any changes to your pension scheme’s default percentage rates because you have tiered certification, please send details to your payroll specialist, who will ensure the changes are made from the start of the new tax year.

Pension Diary:

The Pension Diary will automatically update to 2026/2027 when your portal is rolled forward into 2026/2027. The Pension Diary automatically generates two years in advance.

Bank Holidays

For information purposes, here are the UK Bank Holidays impacting the 2026/2027 Tax year. Bank Holidays have the following impact: 

• BACS and Payment Submissions to pay employees or third parties (e.g. HMRC) do not include Bank Holidays  
• The Payroll Bureau, and other UK Fourth employees, do not operate on Bank Holidays (with the exception of support agents and out-of-hours support from Engineering teams)

Full Payment Submission & Employer Payment Summary

Full Payment Submission (FPS)

HMRC have updated FPS for the 2026/2027 tax year with the following items:

• Student Loan Plan Type will now accept 05, for Plan Type 5 (Data Item 192)
• Statutory Parental Bereavement Pay (Northern Ireland) Data Items:
  • Value of Statutory Parental Bereavement pay year to date in Northern Ireland (Data Item 223)
  • Access to Statutory Parental Bereavement pay in Northern Ireland due to miscarriage (Data Item 224)
  • Northern Ireland employee workplace postcode (Data Item 225)

In addition to the above, Fourth have now added the following items to FPS submitted via the Payroll module:

• Payrolling Benefits in Kind Data Items:
  • Benefits Taxed Via Payroll YTD (Data Item 149)
  • Benefits Tax Via Payroll (Data Item 60)
  • Company Car & Car Fuel Data Items:
    • Car Make (Data Item 175)
    • First Registered (Data Item 214)
    • Co2 (Emissions) (Data Item 176)
    • Zero Emission Mileage (Data Item 211)
    • Fuel (Type) (Data Item 177)
    • ID (Registration) (Data Item 178)
    • Amendment (Indicator) (Data Item 179)
    • Price (Data Item 180)
    • AvailFrom (Available From) (Data Item 181)
    • CashEquiv (Cash Equivalent) (Data Item 182)
    • AvailTo (Available To) (Data Item 183)
    • Provided (Free Fuel) (Data Item 184)
    • CashEquiv (Cash Equivalent) (Data Item 185)
    • Withdrawn (Free Fuel) (Data Item 186)

FPS Correction functionality has been updated so that any corrections being made to the 2025/2026 Tax Year FPS' include the following (see last year's release note for FPS updates for further information):

• Statutory Neonatal Care Pay Year to Date Values (Data Item 217)
• Workplace Postcode (Data Item 218)

Employer Payment Summary (EPS)

HMRC have updated EPS for the 2026/2027 tax year with the following items:

• De Minimis State Aid Group Removed, including Error Conditions 
  • See more here
• Value of Statutory Parental Bereavement Pay recovered year to date in Northern Ireland (Data Item 221)
• Value of NIC compensation on Statutory Parental Bereavement Pay year to date in Northern Ireland (Data Item 222)

Benefits in Kind (BIK)

The 2026/2027 Tax Year is the final tax year that employers will be able to voluntarily payroll benefits, and/or) use P11Ds to report Benefits in Kind to HMRC. From April 2027, payrolling benefits in kind will be mandatory for all employers (with the exception of Living Accommodation & Low Interest/Interest Free loans).

For the 2026/2027 tax year, several statutory upratings affect how vehicle-related benefits are valued for tax purposes. From 6 April 2026:

• The car fuel benefit multiplier increases to £29,200, from £28,200.
• The van benefit charge increases to £4,170, from £4020
• The van fuel benefit charge increases to £798, from £769
• Company car BIK percentage bands also tick up, with the zero‑emission band moving from 3 % to 4 %, and most other CO₂ bands increasing by 1 %, affecting the taxable cash equivalents of employer‑provided cars
  • More information here
• Other benefits, such as qualifying relocation expenses (£8000 thresholds) and non-vehicle benefits, remain under existing thresholds and valuation calculations.

Please note: The 2025/2026 values (from 6 April 2025) have also been updated for the sake of our P11D Processing of the 2025/2026 Tax Year.

Rolling the Portal Forward into the New Tax Year

Portals will be available to roll forward into the 2026/2027 Tax Year from 12th March 2026.

To arrange for your portal to be rolled forward to the 2026/2027 tax year, your payroll specialist will contact you near the completion of your final pay run for the 2025/2026 tax year. When rolled forward, all new functionality taking effect in the new Tax Year, all rates & thresholds and allowances will automatically update for the 2026/2027 tax year.

The information provided herein is for informational purposes only. It does not constitute legal, tax, accounting, or other professional advice. It describes functionality and configuration options available within Fourth's solutions and services. The appropriate settings for your organisation will depend on your specific circumstances and requirements, and Customers remain solely responsible for all decisions relating to the configuration and usage of Fourth's solutions and services. The information reflects Fourth's understanding of applicable laws and regulations at the time of publication and may not reflect subsequent changes. Customers should seek independent professional advice regarding their specific compliance requirements.