🧾 Income Tax
Personal Allowance & Standard Tax Code
• Personal Allowance: £12,570 (frozen — extended to April 2031)
• Standard Tax Code: 1257L (S1257L Scotland · C1257L Wales)
• Taper: Personal allowance reduces by £1 for every £2 earned above £100,000
Tax Bands — England, Wales & Northern Ireland
Band | Annual Earnings (above PA) | Rate |
Basic | Up to £37,700 | 20% |
Higher | £37,701 – £125,140 | 40% |
Additional | Above £125,140 | 45% |
What's changed: Scotland has widened the Starter and Basic rate bands for 2026–27, meaning lower earners in Scotland pay slightly less income tax than in 2025–26. Higher, Advanced and Top rate thresholds remain frozen. |
Tax Bands — Scotland
Band | Annual Earnings (above PA) | Rate |
Starter | Up to £3,967 | 19% |
Basic | £3,968 – £16,956 | 20% |
Intermediate | £16,957 – £31,092 | 21% |
Higher | £31,093 – £62,430 | 42% |
Advanced | £62,431 – £125,140 | 45% |
Top | Above £125,140 | 48% |
🧮 National Insurance: Rates & Thresholds
🆕 What's changed: The Lower Earnings Limit (LEL) increases from £125 to £129 per week. All other Class 1 thresholds remain unchanged from 2025–26. |
Class 1 Thresholds
Threshold | Weekly | Monthly | Annual |
Lower Earnings Limit (LEL) | £129 | £559 | £6,708 |
Primary Threshold (PT) | £242 | £1,048 | £12,570 |
Secondary Threshold (ST) | £96 | £417 | £5,000 |
Upper Earnings Limit (UEL) | £967 | £4,189 | £50,270 |
Upper Secondary Threshold (UST — under 21, apprentices, veterans) | £967 | £4,189 | £50,270 |
Freeport / Investment Zone Upper Secondary Threshold | £481 | £2,083 | £25,000 |
Class 1 Rates (unchanged from 2025–26)
Contribution | Rate |
Employee (Cat A): PT to UEL | 8% |
Employee (Cat A): above UEL | 2% |
Employer (standard) | 15% |
Class 1A (expenses & benefits) | 15% |
Class 1B (PSA) | 15% |
• Special groups: 0% employer NI up to UST for under-21s, apprentices under 25, veterans, and freeport/investment zone employees.
• Employment Allowance: £10,500 (unchanged). Eligible employers can reduce
their annual NI liability by up to this amount.
💰 Statutory Payments (from 6 April 2026)
Statutory Sick Pay (SSP)
🆕 What's changed: Two significant changes this year: (1) SSP rate increases from £118.75 to £123.25 per week. (2) The 3 waiting days rule is abolished — SSP is now payable from day one of illness for all eligible employees. Employees earning below the LEL also now gain limited SSP entitlement (the lower of £123.25/week or 80% of average weekly earnings). |
• Weekly rate: £123.25 (or 80% of average weekly earnings, whichever is lower)
• Payable from: Day 1 of illness — waiting days abolished
• Use the HMRC SSP calculator to work out daily rates based on qualifying days
Statutory Parental Payments
🆕 What's changed: The standard weekly rate for all statutory parental payments increases from £187.18 to £194.32. |
You MUST review any Statutory Payments for employees that are being paid SSP over the tax year update.
Payment Type | 2026–27 Rate |
Statutory Maternity Pay (SMP) — first 6 weeks | 90% of average weekly earnings |
SMP — remaining weeks | £194.32 or 90% AWE (whichever is lower) |
Statutory Paternity Pay (SPP) | £194.32 or 90% AWE (whichever is lower) |
Statutory Adoption Pay (SAP) — first 6 weeks | 90% of average weekly earnings |
SAP — remaining weeks | £194.32 or 90% AWE (whichever is lower) |
Statutory Shared Parental Pay (ShPP) | £194.32 or 90% AWE (whichever is lower) |
Statutory Parental Bereavement Pay (SPBP) | £194.32 or 90% AWE (whichever is lower) |
Statutory Neonatal Care Pay (SNCP) | £194.32 or 90% AWE (whichever is lower) |
Small Employers' Relief — Recovery Rates
🆕 What's changed: The small employer recovery rate increases from 108.5% to 109% for 2026–27. |
Your total Class 1 NI (previous tax year) | Recovery rate |
Above £45,000 | 92% |
£45,000 or lower | 109% (Small Employers' Relief) |
⚠ From 6 April 2026, SPBP is also extended to eligible employees in Northern Ireland who have experienced a miscarriage. Eligible employees are entitled to SPBP from the first day of employment. |
🎓 Student Loan Repayment Thresholds
Plan | Annual Threshold | Rate | Change from 2025–26 |
Plan 1 | £26,900 | 9% | ↑ from £26,065 |
Plan 2 | £29,385 | 9% | ↑ from £28,470 |
Plan 4 (Scotland) | £33,795 | 9% | ↑ from £32,745 |
Plan 5 | £25,000 | 9% | No change |
Postgraduate Loan (PGL) | £21,000 | 6% | No change |
• If an employee has more than one plan type, deduct the plan with the lowest threshold first, until HMRC issues a Start Notice.
• You can deduct a postgraduate loan at the same time as one student loan plan.
💷 National Minimum Wage (from 1 April 2026)
🆕 What's changed: All NMW/NLW rates increase from 1 April 2026. The National Living Wage rises by 4.1% to £12.71/hour. The accommodation offset also increases. |
Age / Role | New Rate (April 2026) | Previous Rate |
Aged 21+ (National Living Wage) | £12.71 | £12.21 |
Aged 18–20 | £10.85 | £10.00 |
Under 18 (above school leaving age) | £8.00 | £7.55 |
Apprentice (under 19, or 19+ in first year) | £8.00 | £7.55 |
Accommodation Offset (per day) | £11.10 | £10.66 |
🏦 Pensions & Auto-Enrolment
The auto-enrolment thresholds are unchanged for 2026–27:
Threshold | Amount |
AE Trigger (annual earnings) | £10,000 |
Qualifying Earnings Lower Limit | £6,240 per year |
Qualifying Earnings Upper Limit | £50,270 per year |
• Future reforms — planned but not yet legislated:
– Lower the AE age threshold from 22 to 18
– Remove the lower qualifying earnings limit (so contributions calculated from £1)
– No implementation date confirmed for either change
📚 Apprenticeship Levy
| 2026–27 Rate |
Levy charge | 0.5% of annual pay bill |
Annual allowance | £15,000 |
Pay bill threshold | Above £3 million |
This document is for guidance only. Always verify figures against current HMRC publications before processing payroll. Last updated: March 2026.