During the United Kingdom Budget 2025, the Chancellor of the Exchequer announced several legislative changes. Key updates effective from 6 April 2026 (unless otherwise stated) include:
Legislative summary of changes
The following changes apply to the National Living Wage/National Minimum Wage:
- National Living Wage (NLW) for over 21-year-olds will increase by 50p an hour to £12.71, a 4.1% uplift.
- National Minimum Wage (NMW) for those aged 18 to 20 will see an increase to £10.85, an uplift of 8.5%.
- NMW for 16 and 17 year olds (and adults in the first year of an apprenticeship) will rise to £8 per hour, a 6% uplift.
Student and postgraduate loan thresholds and new plan type
Legislative summary of changes
The following changes were announced to student and postgraduate loans thresholds:
|
Plan |
Threshold |
|
Student loan plan 1 |
£26,900 |
|
Student loan plan 2 |
£29,385 |
|
Student loan plan 4 (Scottish) |
£33,795 |
|
Student loan new plan 5 |
£25,000 |
|
Postgraduate loan |
£21,000 |
- The new plan 5 will become the default plan if the plan is not known. There is no change to the deduction rate, which remains at 9% for Student Loans and 6% for Postgraduate Loans.
- Additional resources:
Statutory leave pay rates
Legislative summary of changes
- Small employers’ relief rate has increased to 109%.
- Statutory pay rate amendments
-
- The Lower Earnings Limit weekly rate has increased to £129.
- The statutory parental leave weekly rate has increased to £194.32 for the following leave types:
-
-
- Statutory Maternity Pay (SMP).
- Statutory Paternity Pay (SPP).
- Statutory Adoption Pay (SAP).
- Statutory Shared Parental Pay (ShPP).
- Statutory Parental Bereavement Pay (SPBP).
- Statutory Neonatal Care Pay (SNCP).
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-
- Statutory Sick Pay Amendments
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-
- The Statutory Sick Pay weekly rate has increased to £123.25.
- The waiting period has been removed.
- The lower earnings limit qualifying criteria have been removed.
- Weekly rate will be paid at the lower of
-
-
-
-
- £123.25 or
- 80% of the employee’s normal weekly earnings
-
-
National Insurance Contributions (NIC) rates and earnings limits
Legislative summary of changes
The following changes to National Insurance Contributions were announced:
- The Lower Earnings Threshold has increased to £6,078 per annum (£129 per week).
- The Employer’s relief for employing Veterans – extended for a final 2 years to April 2028.
- Small Profits Threshold to increase to £7,105 per annum.
Car fuel benefit & van and van fuel benefit
Legislative summary of changes
HMRC has updated the Benefit-In-Kind (‘BIK’) charge rates for company cars and vans for 2026-2027. The updates include of:
- Car Fuel Charge Multiplier: £28,200 to £29,200.
- Van Benefit Charge: £4,020 to £4,170.
- Van Fuel Benefit Charge: £769 to £798
Scotland’s income tax rates
Legislative summary of changes
On 4 December 2025, Shona Robison, the Cabinet Secretary for Finance, presented Scotland’s Budget for 2026-2027. The key changes are:
- The Starter rate band will increase by 22.6%.
- The Basic rate band will increase by 6.6%.
- The effect of this will be to increase the thresholds at which taxpayers pay the Basic rate and Intermediate rate by 3.5%.
- These changes will take effect from the start of the tax year on 6 April 2026.
|
PAYE Tax Rate |
Tax Rate |
Lower Income Limit |
Upper Income Limit |
Tax on Threshold |
|
Starter rate |
19% |
£0.00 |
£3,967.00 |
£0.00 |
|
Basic rate |
20% |
£3,968.00 |
£16,956.00 |
£753.73 |
|
Intermediate rate |
21% |
£16,957.00 |
£31,092.00 |
£3,351.53 |
|
Higher rate |
42% |
£31,093.00 |
£62,430.00 |
£6,320.09 |
|
Advanced rate |
45% |
£62,431.00 |
£125,140.00 |
£19,482.05 |
|
Top rate |
48% |
£125,141.00 |
£9,999,999,999.00 |
£47,701.55 |
P60 Employee tax certificate
Legislative summary of changes
Each year, HMRC publishes updated technical specifications for substitute P60 forms (‘End of Year Certificate’). Following the Autumn Budget 2025, the Employer Substitute P60 Forms – Specification for 2026 to 2027 was published to assist employers in meeting the reporting requirements for the 2026/27 tax year.
The following changes apply for the 2026/2027 tax year:
- Unique Identifier (bottom left corner): updated to ‘2026 to 2027’ from ‘2025 to 2026’.
- Product Code and Imprint (bottom right corner): updated to ‘HMRC 12/25’ from ‘HMRC 12/24’.
- Tax Year to 5 April: updated to 2027 from 2026.
Should you have any questions regarding the United Kingdom | Annual Amendments 2026/27, please feel free to visit our Support page for more ways to get in touch, or email us at [email protected].
The Deel Local Payroll Team