New Tax Year Payroll Updates for 2025/26 📅💼
Sam Graham📌 The new tax year has officially begun! Is your business ready for the latest payroll changes?
April marks the start of the 2025/26 UK tax year, and with it comes key updates to payroll legislation, tax codes, minimum wage rates, and statutory payments. Staying compliant is critical to avoid costly penalties and ensure smooth payroll processing.
Here’s what employers and payroll managers need to know for the new financial year.
1️⃣ Updated Tax Codes for 2025/26 🧾
🔹 The standard personal allowance remains at £12,570 for the 2025/26 tax year.
🔹 Most employees will be on the tax code 1257L, unless HMRC has issued a different code.
🔹 Make sure your payroll system is using the correct tax codes, especially for new starters and those switching jobs.
✅ Tip: Double-check employee tax codes via HMRC’s PAYE Online Service to avoid over/underpayment of tax.
2️⃣ New National Minimum Wage (NMW) & Living Wage Rates 💷
From 1 April 2025, updated wage rates apply:
| Age Group | 2024/25 Rate | 2025/26 Rate |
|---|---|---|
| Age 21 and over (NLW) | £11.44/hr | £12.21/hr |
| Age 18–20 | £8.60/hr | £10.00/hr |
| Under 18 & Apprentices | £6.40/hr | £7.55/hr |
📌 Employers must update pay rates from the first pay period on or after 1 April 2025.
✅ Tip: Review your entire workforce—especially apprentices, part-time, and young workers—to ensure legal compliance.
3️⃣ Statutory Pay Rate Changes 🏥
From April 2025, new statutory payment rates apply:
| Statutory Leave Type | New Weekly Rate (2025/26) |
|---|---|
| Statutory Sick Pay (SSP) | £118.75 |
| Maternity/Paternity Pay | £184.03 |
| Adoption Pay | £184.03 |
📌 These rates must be applied for any leave starting after 6 April 2025.
✅ Tip: Payroll software should automatically adjust these rates—but verify with your provider or payroll team.
4️⃣ Student & Postgraduate Loan Thresholds 🎓
Updated thresholds for 2025/26:
-
Plan 1: £24,990
-
Plan 2: £27,295
-
Plan 4 (Scotland): £27,660
-
Postgraduate Loan: £21,000
✅ Tip: Ensure your payroll software is set to apply repayments only once these thresholds are crossed.
5️⃣ Employment Allowance Remains at £5,000 💼
✔ Eligible employers can still claim up to £5,000 off their employer’s Class 1 NICs bill.
✔ This is especially useful for small businesses and start-ups looking to save on payroll costs.
✅ Tip: Don’t forget to submit your claim via your payroll software or HMRC online.
6️⃣ P60s Must Be Issued by 31 May 📝
✔ All employees on payroll as of 5 April 2025 must receive a P60 by 31 May 2025.
✔ This is a legal requirement, not a suggestion.
✅ Tip: Use your payroll system’s built-in P60 generation tool to simplify the process.
7️⃣ Payroll Compliance Tips for April ✅
✔ Review all employee records and tax codes.
✔ Ensure correct application of new wage rates and statutory payments.
✔ Issue new employee contracts if pay has changed.
✔ Communicate clearly with employees about pay rate changes and deductions.
✔ Back up payroll data and keep records for at least 3 years.
📣 Struggling to Keep Up With Payroll Changes? Let Us Help.
Staying compliant with payroll updates is time-consuming—but it doesn’t have to be.
📌 Personal Payroll offers:
✅ Fully managed payroll for small businesses & accountants
✅ Real-time HMRC submissions
✅ Automatic statutory payment updates & compliance
✅ Support for minimum wage compliance & student loan deductions
📞 Book a Free Payroll Health Check today and make sure you're fully compliant for 2025/26.
📧 Email us: Contact@personalpayroll.co.uk
📞 Call us: 01276 58 30 58
📅 Book a free payroll audit: Click Here