April PAYE Changes coming

When Britain's new tax year opens on 6 April, it will do so under the weight of more simultaneous PAYE changes than at any point in recent memory. Employers, payroll managers and workers face a layered set of reforms spanning statutory wages, sick pay entitlement, tax code recalibration and digital reporting, all arriving at once. The cumulative burden is considerable.

The Wage Floor Rises Again

The most straightforward change. The National Living Wage for workers aged 21 and over rises to £12.71 per hour from 1 April, up from £12.21. The rate for workers aged 18 to 20 climbs to £10.85, from £10.00. For workers on minimum wage, this is more money in their pockets. For employers in hospitality, retail and care, it is a cost increase arriving on top of the higher employer National Insurance rate introduced last year.

Sick Pay Gets a Long-Overdue Rewrite

This is the most substantive change of the year. From April 2026, waiting days for Statutory Sick Pay (SSP) are abolished, meaning sick pay becomes a day-one right for every employee. Previously, workers had to wait three days before any entitlement kicked in. That changes completely.

Equally important, the Lower Earnings Limit is being removed, meaning all employees, even those earning under £125 gross per week, will now be entitled to Statutory Sick Pay. Part-time and lower-paid workers, who were previously entirely locked out, are now included. The weekly rate itself rises to £123.25.

Threshold Freezes Continue

The Personal Allowance, the amount you earn before paying any income tax, remains frozen at £12,570. Similarly, the threshold for the 40% higher-rate tax remains at £50,270. Because these figures haven't moved to account for inflation, any pay rise you received this year likely dragged more of your income into the taxman's reach. These freezes are set to remain until 2031, making this a long-term reality for UK taxpayers.

Dividends and Savings

If you hold shares outside of an ISA, your tax bill is going up. Starting April 6, the tax rates on dividend income will increase by 2 percentage points:

• Basic Rate: Rises from 8.75% to 10.75%
• Higher Rate: Rises from 33.75% to 35.75%
• Dividend Allowance: Remains at £500.

State Pension Rises

The State Pension is rising by 4.8%, following the average wage growth metric of the Triple Lock.

• New State Pension: Increases to £241.30 per week (£12,547.60 per year).
• Basic State Pension: Increases to £184.90 per week (£9,614.80 per year)

The End of the Two-Child Limit

• Universal Credit: Families will now receive the child element (roughly £3,647 per year) for every child in the household, rather than just the first two.
• Child Benefit: Rates are also increasing by 3.8%. You will now receive £27.05 per week for your eldest child and £17.90 for each additional child.

Also, paternity leave becomes a day-one right from April, allowing employees to give notice of leave from the first day of employment, compared with the previous 26-week qualifying period. Unpaid parental leave follows the same logic, reducing the service requirement from one year to day one.

Summary Table: Key Figures for 2026/27