Employers are navigating major changes, with some already in force and others landing as early as 2026. Updates will impact many areas, including payroll and compliance enforcement. Let’s take a look at the key changes.
Minimum wage: big rise from April 2026
New hourly rates for both the National Living Wage (NLW) and the National Minimum Wage (NMW) apply from 1 April 2026, with the largest percentage increase being for 18-20-year-olds. HMRC continues to name and shame those employers who make minimum wage errors, with almost 500 employers who failed to pay the minimum wage identified in the latest naming round in October 2025.
Fair Work Agency launches in April 2026
A new national enforcement body, the Fair Work Agency, or FWA, is due to be set up in April 2026. The FWA will streamline enforcement of certain employment rights and will have powers to inspect workplaces, issue penalties and bring tribunal claims for workers.
Mandatory payrolling of benefits in kind from April 2027
From April 2027, most benefits in kind and taxable expenses which are currently reported on P11Ds will need to be reported in real-time through the payroll. Employers can choose to adopt the new system early on a voluntary basis, but registration is required to do so.
Salary Sacrifice pensions: NIC cap from April 2029
As announced in the Autumn Budget 2025, from April 2029, only the first £2,000 of employee pension contributions made through salary sacrifice each year will be exempt from National Insurance contributions (NICs). Contributions above the £2,000 limit will still be able to be made through salary sacrifice arrangements but employee contributions above this limit will be subject to employer and employee NICs. Employers should plan for increased NIC costs.
Other updates
Employers can no longer report PAYE disputes through helplines or webchat. Instead, HMRC’s new online form must be used to help find the payroll error and fix the problem.
HMRC’s Advisory Electric Rates for fully electric cars now distinguish between home and public charging, recognising the higher cost of public charging.
We can help
Employer compliance remains crucial, and the changing landscape adds further complexity. If you would like to read more on the latest issues in payroll, tax and employment law, take a look at February’s Topical Issues which provide more detail. Additionally, if you would like tailored advice, we are here to help.