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Five Payroll Changes You Need to Know for 2026/27

By TaxHelper Editorial

Five Payroll Changes You Need to Know for 2026/27

Every 6 April the UK payroll landscape shifts. Some changes are headline-grabbing; others quietly erode your take-home pay without anyone announcing them. Here are the five things that matter most for 2026/27.

1. The Personal Allowance Is Still Frozen at £12,570

The Personal Allowance has been stuck at £12,570 since April 2021 — and it stays there until at least April 2028. In isolation that sounds harmless, but combine it with average wage growth of 4–5% a year and the effect is significant.

A worker earning £35,000 in 2021/22 paid income tax on £22,430 of their salary. If that salary has risen to £40,000 by 2026/27, they now pay tax on £27,430 — an extra £5,000 of taxable income, generating around £1,000 more in income tax annually. They did not get a tax rise. The threshold freeze did it for them.

This is fiscal drag, and it is affecting millions of workers. Use our salary calculator to model your exact position.

2. Higher-Rate Threshold Also Frozen

The 40% higher-rate threshold remains at £50,270 for the fifth consecutive year. In 2021/22 roughly 4.4 million people paid higher-rate tax. By 2027/28 that number is projected to exceed 7 million. If your salary is approaching £50,000, you may cross into higher-rate territory sooner than you think — especially if you receive a bonus or pay rise.

One way to mitigate this: increasing your pension contributions (especially via salary sacrifice) reduces your taxable income and can keep you within the basic-rate band.

3. Employer National Insurance Went Up — But Does It Affect Your Pay?

From April 2025, employer NI rose from 13.8% to 15%, and the Secondary Threshold dropped from £9,100 to £5,000 per year. This directly increases the cost of employing people.

It does not reduce your gross pay today. But it does affect:

  • Pay rise negotiations — your employer now pays more per £1 of salary increase
  • Salary sacrifice schemes — employer NI savings from salary sacrifice are now worth more, so some employers are increasing employer pension contributions in return
  • Hiring decisions — higher employment costs may affect headcount

4. Student Loan Thresholds Unchanged

The repayment thresholds for all student loan plans are unchanged for 2026/27. Plan 2 borrowers continue to repay at 9% above £27,295. With average graduate salaries rising, more borrowers are now above the threshold and repaying more each month.

Plan 5 borrowers (those who started courses from August 2023) face a 40-year repayment window rather than 30 years — the longest repayment period ever introduced in the UK student finance system.

5. Scottish Taxpayers Face Higher Rates on Mid-Range Incomes

Scotland continues to operate its own income tax rates, which diverge significantly from the rest of the UK above £43,662. Scottish workers earning between £43,663 and £75,000 pay 42% (versus 40% in England), and those above £75,000 pay 45% (versus 40%). Only at the very top (above £125,140) do rates converge again.

The practical effect: a Scottish teacher earning £52,000 pays roughly £620 more in income tax per year than an equivalent teacher in England.

What to Do Now

Run your numbers through our salary calculator and select your region — we apply the correct Scottish or Welsh rates automatically. You can also compare 2025/26 vs 2026/27 figures side by side to see your exact year-on-year change.