31 Mar Payroll Alert: Your Quick Guide to the April 6th Rate Changes
Are you ready for the big shift on April 6th?
With the new tax year just around the corner, there’s a lot more to think about than just clearing out your old receipts. For business owners across the UK, April 6th, 2026, marks the beginning of several significant changes to payroll rates and statutory requirements.
At Harrison’s Accountancy, we know that keeping up with shifting legislation can feel like a full-time job in itself. Between the National Living Wage increases and the new rules surrounding Statutory Sick Pay, there is a lot to digest. But don’t worry: we’ve put together this quick guide to help you navigate the changes, stay compliant, and keep your business running smoothly.
The New National Minimum Wage Rates
The biggest headline for the 2026/27 tax year is the increase in the National Living Wage (NLW) and National Minimum Wage (NMW). These changes are designed to keep pace with the cost of living, but for many employers, they represent a significant increase in overheads.
From April 6th, 2026, here are the rates you need to be paying:
- National Living Wage (Ages 21+): £12.71 per hour
- 18-20 Year Olds: £10.85 per hour
- 16-17 Year Olds & Apprentices: £8.00 per hour
If you have employees crossing an age threshold during the pay period, or if you employ apprentices who are completing their first year, it’s vital to ensure your systems are updated immediately. Failing to pay the correct minimum wage isn't just a "oops" moment: it can lead to heavy fines and being "named and shamed" by HMRC.
Statutory Sick Pay (SSP): The "Day One" Change
Perhaps the most significant administrative shift this year involves Statutory Sick Pay (SSP). Traditionally, employers were only required to pay SSP after the third "waiting day" of an employee's illness.
However, as of April 6th, 2026, SSP is now payable from day one of an employee's absence.
The rate is also increasing to £123.25 per week.
This change is a double-whammy for small businesses. Not only is the weekly rate higher, but the removal of waiting days means that even short-term absences (like a 24-hour flu) will now trigger a requirement for statutory pay. From a cash flow perspective, this is something you’ll want to account for in your 2026/27 budgets. As your small business accountant, we recommend reviewing your sickness policy to ensure it aligns with these new statutory minimums.
Statutory Family Pay Updates
It’s not just wages and sick pay that are moving. If you have team members on maternity, paternity, or other forms of family leave, those statutory rates are also increasing.
The new rate for Statutory Maternity, Paternity, Adoption, Shared Parental, and Parental Bereavement Pay is increasing to £194.32 per week (or 90% of the employee’s average weekly earnings, whichever is lower).
While a portion of this is usually reclaimable from HMRC, the initial payout comes from your business's bank account. Ensuring you have the right records in place is essential to making sure you get that money back as quickly as possible.
How Xero Makes the Transition Easier
If the thought of manually updating all these rates makes you want to hide under your desk, we have good news. If you are using cloud accounting software like Xero, much of the heavy lifting is done for you.
Xero’s payroll module is designed to automatically update with the new statutory rates. When you run your first payroll after April 6th, the system should prompt you or automatically apply the new NLW and SSP rules.
However, "automated" doesn't mean "ignore it." You should still:
- Check Employee Records: Ensure everyone’s age and birthday are correct in the system so the right NLW rate applies automatically.
- Verify Apprentice Status: Make sure apprentices who have finished their first year are moved to the correct age-related rate.
- Audit Your First Run: Compare your first April payroll against your March run to see the exact impact on your total wage bill.
By using technology to handle the calculations, you reduce the risk of human error and free up time to focus on growing your business.
Absorbing the Costs: Reviewing Your Pricing
Let’s be honest: these increases aren't small. For a business with ten employees on the National Living Wage, an extra 50p per hour plus the new SSP rules can add thousands of pounds to your annual expenses.
This is where management accounts become your best friend. Instead of waiting until the end of the year to see if you’ve made a profit, management accounts give you a real-time look at your margins.
If your staff costs are rising, your prices may need to rise too. Here’s how to approach it:
- Calculate the "True Cost" of an Employee: Remember to factor in employer National Insurance and pension contributions on top of the new £12.71 hourly rate.
- Analyze Your Margins: Look at your most popular products or services. If your labor costs have gone up by 5%, are you still making the profit you need?
- Don't Fear the Price Increase: Your customers are likely seeing price increases everywhere. A transparent, modest adjustment to your pricing can protect your business's future and ensure you can continue to pay your staff fairly.
Why Outsource to a Payroll Bureau?
As a business grows, payroll becomes one of the most stressful tasks on the "to-do" list. It’s not just about clicking "submit"; it’s about pensions, student loans, attachment of earnings, and keeping up with the ever-changing HMRC landscape.
Many of our clients choose to move their payroll over to our dedicated payroll bureau. Why?
- Compliance Peace of Mind: We stay on top of the rate changes so you don't have to.
- Time Savings: Stop spending your Sunday nights wrestling with payslips.
- Professional Support: When an employee has a question about their tax code or sick pay, we’re here to provide the answers.
Let’s Get Ready for the New Financial Year
April 6th is just a few days away. If you haven’t yet looked at how these rate changes will affect your bottom line, now is the time to act. Whether you’re looking for a better way to manage your management accounts or you want to hand over the headache of payroll to a professional small business accountant, we’re here to help.
The transition to a new tax year is the perfect opportunity to set new financial habits. By staying proactive and using the tools available to you, you can turn these legislative changes into a catalyst for a more organized, profitable business.
Ready to take the stress out of your payroll?
Contact the team at Harrison’s Accountancy today. We can review your current setup, help you migrate to Xero, or take over your payroll entirely so you can focus on what you do best.
Drop us a line or give us a call: let’s make the 2026/27 tax year your best one yet!
For more information on our services, visit our Accountancy Services page.
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