Key Payroll Legislation Updates for 2025/26

The 2025/26 tax year has introduced several major changes to UK payroll legislation. From National Insurance hikes to new statutory leave entitlements, employers must act now to stay compliant and avoid costly errors. At Pecunia Pro, we break down the updates and help you implement them smoothly.

1. Employer National Insurance Contributions
From April 2025, the NIC rate increased from 13.8 percent to 15 percent, and the threshold dropped from £9,100 to £5,000. This means employers pay NICs on a larger portion of earnings, increasing payroll costs.

2. Employment Allowance Expansion
To offset NIC increases, the Employment Allowance rose to £10,500, and the £100,000 eligibility cap was removed. More businesses can now benefit, if claims are valid and timely.

3. National Minimum Wage Increases
New rates from April 2025 include:
● £12.21 per hour for ages 21 and over,
● £10.00 per hour for ages 18 to 20,
● £7.55 per hour for under 18s.

Employers must ensure salary sacrifice schemes and benefits do not push wages below legal thresholds.

4. Neonatal Care Leave and Pay
Starting April 2025, eligible parents can take up to 12 weeks of paid neonatal care leave. This is a statutory right and must be processed separately from standard parental leave.

5. Real-Time Benefits-in-Kind Reporting
Mandatory from April 2026, but early adoption is encouraged. Payroll systems must be updated to handle taxable benefits like company cars and health insurance in real time.

Final Thoughts
These legislative changes reflect the government’s push for fairer wages and stronger worker protections. Pecunia Pro is here to help you stay compliant, efficient, and prepared.
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