Payroll Changes for 2026/27: What Small Businesses Need to Check Now
If you run a small business, payroll changes are not something to leave until the last minute.
From April 2026, employers need to deal with two key sets of payroll changes. National Minimum Wage and National Living Wage rates apply from 1 April 2026, while PAYE, tax code and National Insurance changes apply from 6 April 2026. For some businesses, that means reviewing pay rates. For others, it is about checking payroll software, understanding employer costs properly, and avoiding mistakes that can become expensive quickly. HMRC has published the 2026 to 2027 employer payroll rates and thresholds, including a £5,000 secondary threshold for employer National Insurance and a 15% employer Class 1 National Insurance rate.
For some employers, that sounds like routine admin.
Done properly, it is also a good moment to tighten up payroll, stay compliant, and make sure your business is not paying more than it needs to through poor setup or missed reliefs.
At AMP Eleven, we help small businesses keep payroll clear and manageable. That includes support with payroll processing, software, deadlines, bookkeeping, and wider business admin, so employers are not left trying to keep up with changing rules on their own.
What has changed for payroll in 2026/27?
There are a few key areas employers need to pay attention to.
National Minimum Wage rates increased from 1 April 2026
The new hourly rates from 1 April 2026 are:
£12.71 for workers aged 21 and over
£10.85 for workers aged 18 to 20
£8.00 for workers aged under 18
£8.00 for apprentices aged under 19, and apprentices aged 19 or over in the first year of their apprenticeship
If you employ younger staff, apprentices, or hourly paid workers, this is one of the first things to review.
Payroll tax codes and PAYE thresholds updated from 6 April 2026
HMRC says the standard Personal Allowance for 2026 to 2027 remains £12,570. The standard tax code for many employees is 1257L, which reflects that Personal Allowance. The PAYE starting point under the standard personal allowance is £242 per week or £1,048 per month. HMRC also notes that 1257L only acts as an emergency tax code when followed by W1, M1 or X.
Employer National Insurance remains a major cost point
For 2026 to 2027, HMRC’s employer rates and thresholds show:
secondary threshold: £5,000 per year
employer Class 1 National Insurance rate: 15%
That matters because businesses now start paying employer National Insurance at a lower earnings threshold than many were used to before the April 2025 changes. HMRC’s policy paper confirms the threshold fell from £9,100 to £5,000, the employer NIC rate increased from 13.8% to 15%, and the Employment Allowance increased to £10,500.
Who do these payroll changes affect?
These changes affect any employer running payroll, but they are especially important for:
small businesses with hourly paid staff
employers with apprentices or younger workers
companies taking on their first employees
business owners already feeling pressure from rising wage and National Insurance costs
If you have employees on or near minimum wage, or you are growing your team, even small rate changes can have a noticeable effect on monthly payroll costs. The 2026 National Minimum Wage increases took effect from 1 April 2026, while the main payroll tax year changes apply from 6 April 2026.
What employers need to do now
For most small businesses, the smartest approach is to deal with this early and keep things simple.
1. Review pay rates
Check whether any employees need a pay increase to stay compliant with the new National Minimum Wage or National Living Wage rates from 1 April 2026.
2. Check your payroll software and settings
Payroll software should be updated for the new tax year so it uses the right thresholds, tax codes, and National Insurance rates. HMRC notes that payroll software will work out how much tax and National Insurance to deduct, but that depends on the correct setup for the new year.
3. Budget for employer costs properly
For many businesses, the main issue is not just employee pay. It is the full employer cost on top, especially with employer National Insurance at 15% above the secondary threshold.
4. Check whether you can claim Employment Allowance
Employment Allowance can reduce an eligible employer’s annual National Insurance liability by up to £10,500. For the right business, that can make a meaningful difference.
5. Make sure payroll works with the rest of your admin
Payroll rarely sits on its own. It affects bookkeeping, pension administration, cash flow planning, and compliance. If the system behind it is messy, deadlines and reporting become harder than they need to be.
Why payroll changes catch small businesses out
For a lot of employers, payroll looks simple until the details start stacking up.
Rates change. Thresholds change. Software needs updating. Employer costs shift. And if minimum wage is missed or payroll is processed incorrectly, the problem is not just admin. It can turn into back pay, penalties, or unnecessary cost exposure. HMRC’s 2026 to 2027 employer guidance is clear that employers need to use the updated rates and thresholds when operating payroll.
That is usually where smaller businesses feel the pressure, not because payroll is impossible, but because it is one more critical process to stay on top of while running everything else.
How AMP Eleven can help
This is where we can take the stress out of it.
We help small businesses keep payroll accurate, compliant, and manageable.
That includes helping you:
review wage changes and payroll impact
stay on top of updated payroll rates and thresholds
make sure software is set up properly
manage payroll alongside bookkeeping and admin
keep deadlines, reporting, and employer obligations under control
The aim is simple.
Instead of leaving you to interpret payroll changes on your own, we help you put the right structure in place and keep it running smoothly.
Why acting early matters
The payroll year does not wait.
National Minimum Wage changes took effect from 1 April 2026, and the main tax year payroll changes apply from 6 April 2026. That means employers should already have updated pay rates, checked payroll settings, and reviewed the cost impact on the business.
If you leave it too late, payroll errors are harder to unwind and more frustrating to fix.
Book a free consultation
If you are unsure whether your payroll is set up correctly for 2026/27, we can help.
We can talk through:
what has changed
how the new rates affect your business
whether your payroll software and setup are right
how AMP Eleven can support your payroll, bookkeeping, and wider compliance
Book a free consultation with AMP Eleven and let’s make payroll simpler, clearer, and easier to manage.