Every April brings a handful of changes. Usually, they are only tweaks – a wage rate here, a threshold there. You update your software, tick a few boxes, and move on. But 6 April 2026 is different. This isn’t a routine update; it’s the most significant package of payroll reform in a generation, and if you’re still treating it like business as usual, you’re heading for trouble.
There has been a lot of noise about many of these changes, but here they all are, in one place.
The total overhaul of Statutory Sick Pay
This is the headline change, and it’s enormous. The Employment Rights Act 2025 has delivered the most substantial reforms to Statutory Sick Pay since 1985. Four decades of the same system, gone overnight.
What’s changed?
No more waiting days
Previously, SSP didn’t kick in until the fourth qualifying day of sickness – meaning the first three days of absence cost employees nothing and employers nothing. From 6 April, that’s gone. SSP is payable from day one.
The scrapping of the earnings threshold
Under the old rules, employees had to earn at least £125 per week just to qualify for SSP. That threshold has been removed entirely. Every employee, whether they are part-time, casual, or on zero-hours contracts, now qualifies for SSP. This change is bringing an estimated 1.3 million additional workers into the scheme for the first time.
A new rate and calculation
SSP rises to £123.25 per week (up from £118.75), but here’s where it gets technically interesting (well, we find it interesting!) – for employees whose average weekly earnings fall below that figure, SSP will be paid at 80% of their Average Weekly Earnings instead. it.
Transitional protection
Employees already off sick before 6 April and still absent on or after that date will continue on the uprated flat rate of £123.25 until they return to work, exhaust their 28-week entitlement, or their contract ends.
What does this mean for your business?
Short-term absences that previously cost you nothing now cost you something. Every sick day from every employee, regardless of their hours or pay, triggers an SSP liability. For businesses with high absence rates, this is a material cost increase.
Action points
- Confirm with your payroll software or managed payroll provider that AWE calculations are tested and live.
- Revise any employment contracts or staff handbooks that reference the old waiting days or earnings threshold – those clauses are now unlawful.
- Update your HR team and Managers too, they need to know the rules have changed.
See our extensive and detailed blog on the SSP changes here.
National Minimum Wage increases (From 1 April)
The wage uplifts landed a week before the tax year change, on 1 April 2026.
- National Living Wage (21+) – £12.71/hr
- 18–20 rate – £10.85/hr
- 16–17 & Apprentice rate – £8.00/hr
The government has also signalled its intention to eventually lower the NLW age threshold to 18 – something to keep in your sightlines for future years.
Watch out for pay compression
When entry-level rates jump, the gap between your lowest-paid staff and those just above them can shrink to almost nothing. It’s worth reviewing your full pay structure, not just the employees sitting at minimum wage.
And salary sacrifice schemes
If you offer salary sacrifice arrangements, check that no employee falls below minimum wage after deductions. This catches businesses out more often than you’d think.
Action points
- Review all employee pay rates and update payroll before the first pay run after 1 April.
- Run a review of all pay scales, not just those at NMW
- Check any salary sacrifice arrangements and fo you have processes in place to ensure it does not bring wages below NMW
Statutory family pay rates rise
From 6 April 2026, the weekly rate for Statutory Maternity Pay, Paternity Pay, Adoption Pay, Shared Parental Pay, Parental Bereavement Pay, and Neonatal Care Pay all rose to £194.32 (up from £187.18).
The Lower Earnings Limit for qualifying for these payments increases from £125 to £129 per week.
SMP for the first six weeks remains at 90% of average weekly earnings – that element is unchanged.
The Fair Work Agency launches
This is one that a lot of employers haven’t fully clocked yet, and they should.
The Fair Work Agency (FWA) consolidates several existing enforcement bodies into a single, powerful regulator. Its remit covers National Minimum Wage, holiday pay, SSP compliance, and broader employment rights, and it comes with serious teeth.
The FWA can:
- Enter business premises, interview staff, and examine payroll records and systems
- Issue notices of underpayment going back up to six years, payable within 28 days
- Bring legal proceedings on behalf of workers
- Enforce RTI submission accuracy
The key point, however, is that FWA is just more enforcement – it’s joined-up enforcement. Issues that previously might have fallen between regulatory cracks can now be spotted, connected, and escalated by a single body. This means that payroll accuracy and governance are no longer back-office concerns; they deserve board-level attention.
6 years of holiday pay records
From 6 April 2026, all UK employers are legally required to retain holiday pay and annual leave records for a minimum of six years. This change, introduced through the Employment Rights Bill, brings annual leave documentation in line with the record-keeping standards already required for NMW compliance.
‘Adequate records’ means documentation of statutory leave taken, pay rates applied, and calculations used. If the FWA comes knocking, you need to be able to produce these.
Action point
Review your record-keeping systems now. If you’re keeping holiday records in a spreadsheet or relying on memory, that’s not going to cut it.
Paternity and parental leave day-one rights
From April 2026, the Employment Rights Act 2025 introduces day-one rights to paternity leave and unpaid parental leave, removing the previous qualifying periods. Employees no longer need a minimum service period to access these entitlements.
This doesn’t directly affect payroll calculations, but it does mean your HR and payroll teams need to be aligned. Day-one entitlements mean you could face requests in the first week of employment.
The income tax and NI picture
A moment of calm amid the storm. There are no changes to income tax thresholds or the personal allowance for 2026/27 – the freeze (brrrrr) continues.
National Insurance thresholds remain static too, with the primary threshold holding at £242 per week / £1,048 per month.
One small change is that the NI Lower Earnings Limit rises slightly to £129 per week, which is relevant for statutory payment qualifying tests.
Higher employer NI contributions (15% above the reduced £5,000 secondary threshold, introduced in April 2025) remain in place. If you haven’t fully absorbed those costs yet, they’re not going away.
Year-end deadlines to diarise
While you’re focused on the reforms, don’t let the compliance calendar slip.
- By 19 April – Final EPS for 2025/26 tax year, with final indicator marked
- By 31 May – P60s issued to all employees on payroll as of 5 April
- By 6 July– P11Ds submitted and PAYE Settlement Agreement agreed with HMRC for 2025/26
- Ongoing – RTI submissions will face increased scrutiny from the FWA
Missing P60 deadlines can result in a fine of up to £3,000 per occurrence. These are not optional extras.
In summary
This is not a year for a last-minute scramble. The combination of SSP reform, NMW increases, the launch of the Fair Work Agency, new record-keeping obligations, and day-one employment rights means the cost of getting payroll wrong has never been higher – financially, legally, and reputationally.
At Ascend, we’ve been preparing for these changes for months. Our systems are updated, our team knows the new rules inside out, and our clients won’t be facing any nasty surprises. That’s what a genuinely managed payroll service looks like.
If you’re not sure your current setup is ready, or if you’re still spending your evenings wrestling with spreadsheets and HMRC guidance, let’s have a conversation.
