EMPLOYMENT INFORMATION

MINIMUM WAGE RATES

The minimum hourly rates that employers must pay their employees go up from 1 April 2026. Employers must pay their employees at least these minimum rates to avoid penalties, back payments and other regulatory action.

If you have employees paid at or just above these levels, you need to ensure that birthdays, full working hours and deductions are properly captured and dealt with. Please contact us for any support with business payrolls, including the operation of minimum wage levels.

 

1 April 2026 – 31 March 20271 April 2025 – 31 March 2026
National Living Wage (for employees aged 21 and over)£12.71£12.21
National Minimum Wage (for employees aged 18-20)£10.85£10.00
National Minimum Wage (for employees aged 16-17 and apprentices)£8.00£7.55

 

EMPLOYMENT TAXES

 

National Insurance Contributions (NICs)

 

NICs deducted from employee wages remain at the same levels as we head into 2026/27. This means that, for employees, no NICs are deducted on the first £12,570 of pay, then a rate of 8% applies on earnings up to £50,270, with a rate of 2% applied thereafter.

 

For employers, the rate of NICs will remain at 15% after the first £5,000* paid to each employee. The available employment allowance to offset this cost remains at £10,500 for eligible claimants.

 

*A higher threshold of £50,270 applies for employees who are under 21 and apprentices under 25. Other variations can also apply.

 

Salary sacrifice for pension contributions

 

From 6 April 2029, the amount that is exempt from NICs will be capped at £2,000 a year for employee contributions made via salary sacrifice. Any employee contributions above this amount made under salary sacrifice will be subject to employer and employee NICs. Employees can still contribute as much as they want to their pensions, including via salary sacrifice, and these contributions will still be exempt from income tax (subject to the usual limits).

 

Removal of tax relief on non-reimbursed homeworking expenses

 

From 6 April 2026, employees will no longer be able to claim tax relief on additional household expenses incurred in employment duties that are not reimbursed by the employer. To date, a claim at the rate of £6 per week has been allowed. Employers can still reimburse employees for these costs where eligible without deducting income tax and NICs.

 

 

 

Enterprise Management Incentive (EMI) company eligibility expansion

 

The following limits will be increased for EMI contracts granted on or after 6 April 2026:

  • Company grant options will be increased from £3 million to £6 million.
  • Gross assets will be increased from £30 million to £120 million.
  • The number of employees will be increased from 250 to 500.
  • The maximum holding period will increase from 10 to 15 years.

 

These limits can also apply retrospectively to existing EMI contracts which have not already expired or been exercised.

 

The EMI notification requirement will also be removed from April 2027.

 

Expanding workplace benefits relief

 

From 6 April 2026, the income tax and national insurance exemption for employer-provided benefits will be extended to cover reimbursements for eye tests, home working equipment, and flu vaccinations.

 

Company car tax

 

Bringing employee car ownership schemes (ECOS) into scope of the benefit in kind (BIK) rules has been delayed from 6 April 2026 to 6 April 2030 to allow more time for the sector to prepare for and adapt to this change in treatment. Transitional arrangements will be in place until April 2031.

 

There is a temporary BIK easement for plug-in hybrid electric vehicles (PHEVs) from 1 January 2025 to 5 April 2028. This easement prevents the tax charge increasing significantly due to new emissions standards. During the easement period, the CO2 emission figure will be deemed to be a nominal figure for the purpose of calculating the BIK. Transitional arrangements will apply to certain PHEVs until 5 April 2031.

 

The BIK charge for vans as well as for car and van fuel will rise in line with inflation from April 2026.

 

Mandatory payrolling of benefits

 

Draft interim guidance and legislation has been issued to aid preparation for reporting BIK in real time through payroll software from April 2027. This is an extension to the original deadline of April 2026.

 

Employers are encouraged to prepare as early as possible to avoid disruption and minimise cost. HMRC is urging everyone not to underestimate the time it will take to ensure payroll processes are sufficiently robust.