Following the Chancellor’s Autumn Budget announcement on 30 October 2024, several legislative changes affecting payroll have been approved by Parliament and will apply for the 2025/2026 tax year. Key updates effective from 6 April 2025 (unless otherwise stated) include:
Scotland Income Tax Rates
The Scottish Rate Resolution (SRR) has increased the income thresholds for the starter, basic and intermediate tax rates by 3.5%. The PAYE rates for the 2025/2026 tax year are as follows:
| PAYE Tax Rate | Tax Rate | Annual Taxable Income |
| Starter rate | 19% | From £0.00 to £2 827.00 |
| Basic rate | 20% | From £2 828.00 to £14 921.00 |
| Intermediate rate | 21% | From £14 922.00 to £31 092.00 |
| Higher rate | 42% | From £31 093.00 to £62 430.00 |
| Advanced rate | 45% | From £62 431.00 to £125 140.00 |
| Top rate | 48% | Above £125 140.00 |
Student and Postgraduate Loan Thresholds
The Department for Education (DfE) and the Welsh Government have introduced the following changes:
- Increase in the annual threshold for Plan 1 to £26 065.00.
- Increase in the annual threshold for Plan 2 to £28 470.00.
- Increase in the annual threshold for Plan 4 to £32 745.00.
- The annual threshold for the postgraduate loan remains at £21 000.00.
- The deduction rates remain at 9% of earnings for Plans 1, 2 and 4, and 6% for postgraduate loans.
Van and Van Fuel Benefit & Car and Car Fuel Benefit
The Van Benefit and Car and Van Fuel Benefit Order 2024 (SI 2024/1349) introduces:
- Flat-rate van benefit charge increase to £769.00.
- Flat-rate van fuel benefit charge increase to £4 020.00.
- Car fuel benefit multiplier increases to £28 200.00.
National Insurance
The National Insurance Contributions Act 2025 and The Social Regulations 2025 amend the following:
- The Lower Earnings Limit increases to £125.00 per week.
- The rate of Secondary Class 1 increases to 15%.
- The Secondary Threshold decreases to £96.00 per week.
- The employment allowance increases to £10 500.00 per annum, and the £100 000.00 income requirement is removed.
Statutory Leave Pay Rates
The Social Security Benefits Up-rating Order 2025 and Statutory Maternity Pay (Compensation of Employers) Miscellaneous Amendment Regulations amend the following:
- The rate of payment for Statutory Sick Pay increases to £118.75 per week.
- The rate of payment for Statutory Maternity, Statutory Paternity, Statutory Adoption, Statutory Shared Parental and Statutory Parental Bereavement increases to £187.18 per week.
- Increase in the Small Employer National Insurance recovery rate to 8.5%.
National Minimum Wage
The National Minimum Wage (Amendment) Regulations 2025 amend the following, effective from 1 April 2025:
- For workers aged 21 and above, the rate increases to £12.21 per hour.
- For workers aged 18 to 20, the rate increases to £10.00 per hour.
- For workers aged under 18 (but above compulsory school leaving age), the rate increases to £7.55 per hour.
- For apprentices aged under 19, the rate increases to £7.55 per hour.
Official Rate of Interest
The Taxes (Interest Rate) (Amendment) Regulations 2025 amend the Official Rate of Interest (ORI) every quarter. Effective from 6 April 2025, the ORI will:
- Increase from 2.25% to 3.75%.
The ORI is used by HMRC to calculate the taxable value of:
- Employment-related loans.
- Some employer-provided accommodation.
RTI (Real Time Information) – Data Item Changes for Reporting
HMRC publishes updated rules, technical specifications and guidelines for RTI submissions for the new tax year. The following changes will apply to EPS and FPS submissions for the 2025/2026 tax year:
- New data items: Statutory Neonatal Care Pay (SNCP), NIC compensation for Statutory Neonatal Care Pay, employee workplace postcode, pension commencement excess lump sum and stand-alone lump sum.
- Changes to existing data items: Comments and requirements have been added for certain existing data items, along with cosmetic enhancements to improve simplicity and accessibility. For detailed information on specific data item changes, please refer to the Technical Specification Document.
Statutory Neonatal Care Leave and Pay
The UK Government introduced the Neonatal Care (Leave and Pay) Act 2023, which provides specific statutory leave and pay rights for eligible parents of babies receiving neonatal care effective from 6 April 2025.