It’s official, spring has sprung! The warmer, longer days are here and the garden beckons. It might not be time to pull out the shorts and summer dresses quite yet, but you may need to dust off your sunglasses before too long.
With Spring comes the new tax year. 2026/27 brings big changes in the world of self-assessment with the introduction of MTD but there are also a few important changes in the world of payroll.

National minimum wage rates

There are the usual increases in the national minimum wage:

• Those aged over 21 see an increase of 4.1% to £12.71 per hour.
• Those aged 18-20 are entitled to £10.85 per hour.
• And those aged 16-17 or on apprenticeships are entitled to £8.00 per hour.

A useful tip for your dental nurse trainees, if they are aged 19 or over and in the first year of their apprenticeship, they can still be paid the apprenticeship rate of £8.00 per hour. Also, if you have a work permit from your local council to employ someone still in full-time education, national minimum wage rules do not apply but bear in mind that any salary paid to them must be commercially justifiable.

Director’s salaries

If you’re a director of a limited company and you take a salary, your salary may need to increase depending on your personal requirements:

• If you’re drawing a salary to have a qualifying year towards your state pension, your salary will need to increase to £559 per month to match the lower earnings limit.
• If you’re drawing a salary to qualify for free childcare, your salary will need to increase to £882 per month, being the equivalent of working 16hrs per week at the national minimum wage.

The personal allowance remains frozen until April 2031 so if your salary is based on the tax-free earnings limit of £12,570 (£1,047.50 per month), it will remain unchanged in 2026/27.

Statutory pay changes

Along with the usual increases in statutory pay rates, there have also been changes to an employee’s entitlement to statutory sick pay (SSP), paternity leave and unpaid parental leave following the reforms outlined in the Employment Rights Act 2025:

Statutory Sick Pay (SSP)

Previously, the first three days of an employee’s sick leave were treated as unpaid waiting days. The new legislation removes the waiting period, so SSP is payable from the first full day of sick leave.

For example, your dental nurse has the flu and calls in before the start of her shift to explain that she won’t be able to come into work. In those circumstances, she would qualify for SSP from that first day of her sick leave. Alternatively, if an employee comes into work and then leaves early due to sickness, they wouldn’t qualify for any SSP on the day they left early but would qualify if she fails to attend work due to sickness on any subsequent days.

SSP this year is the lower of £123.25 and 80% of the employees’ normal weekly earnings and is calculated based on an employee’s usual working pattern. Therefore, if the employee is contracted for five days per week, they would be entitled to £24.65 per day; £30.82 per day for those working 4 days per week; £41.09 per day for those working 3 days per week; £61.63 per week for those working 2 days per week; £123.25 per week for those working just 1 day per week.

SSP is payable for up to 28 weeks and is available to all employees regardless of their level of earnings, length of service or type of contract. An employee can self-certify as sick for up to 7 days but, if the incapacity lasts more than 7 days you can ask your employee to provide medical evidence or a fit note from their doctor or healthcare professional.
It’s also worth remembering that it is no longer possible to recover SSP from HMRC. The annual employment allowance that covers the first £10.5k of employer’s national insurance each year replaced the ability to recover SSP when it was introduced in 2014. Therefore, SSP is a cost to your business.

Paternity leave and unpaid parental leave

Previously, such leave was only available if the employee had been employed for a certain length of time. The new legislation removes that requirement, so such leave is now a right from day 1 of their employment.

For paternity leave, eligible employees can take 1 or 2 consecutive weeks of statutory paternity leave to care for a new child, which can be taken as separate one-week blocks within 52 weeks of the birth. This leave may be unpaid, or the employee may qualify for Statutory Paternity Pay depending on when they started work at your business (see note below).

For unpaid parental leave, eligible employees can take up to 18 weeks for each child up to their 18th birthday. There is an annual limit of 4 weeks for each child, and the leave should be taken in whole weeks but, as their employer, you can agree to different constraints if it suits the needs of the business better.

The new Employment Rights Act does not change the rules surrounding the entitlement for Statutory Maternity Pay (SMP) or Statutory Paternity Pay (SPP). Generally, the employee would need to be in your employment slightly before they or their partner gets pregnant to qualify for SMP / SPP from your business.

If you’d like further information regarding any of the changes outlined above or our payroll services in general, please get in touch.