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From 1 April 2026, significant updates to the UK’s National Minimum Wage (NMW), National Living Wage (NLW), and Statutory Sick Pay (SSP) have come into force.
These changes affect virtually every employer and payroll process, making it essential to review employee pay and ensure compliance immediately.
This guide explains exactly what has changed, what it means for your business, and the practical steps you should take now.
What Has Changed from 1 April?
The start of the new tax year always brings updates, but this year’s changes are particularly important. Both wage thresholds and sick pay rules have been adjusted to reflect rising living costs and broader eligibility.
At a glance, employers must now:
- Pay updated minimum wage rates
- Review all employee salaries for compliance
- Adjust SSP processes to reflect new eligibility rules
- Take action where pay increases are required
New National Minimum Wage Rates for 2026
The government has increased minimum wage rates across all age bands.
The updated hourly rates are:
- Aged 21 and over (National Living Wage): £12.71
- Aged 18–20: £10.85
- Under 18: £8.00
- Apprentice rate: £8.00
These rates apply from the first full pay period on or after 1 April.
Why This Matters
Failing to pay the correct minimum wage can lead to:
- Financial penalties
- Backdated pay requirements
- Reputational damage
- Increased scrutiny from HMRC
Even small discrepancies can trigger compliance issues, so accuracy is critical.
Key Rule for Apprentices
The apprentice rate does not apply indefinitely.
Apprentices must be paid their age-related minimum wage if they:
- Are aged 19 or over, and
- Have completed their first year of apprenticeship
This is one of the most common areas where underpayment occurs, so it is worth double-checking all apprentice records.
How to Check You’re Compliant
Before running payroll, it is essential to review all employees against the new rates.
Practical steps to take:
- Review hourly rates for all staff
- Confirm working hours are correctly recorded
- Check apprentices separately for eligibility changes
- Ensure salary conversions (annual to hourly) meet thresholds
If you use payroll software such as Xero, you can use built-in tools like the National Minimum Wage checker to:
- Scan all employees at once
- Identify potential underpayments
- Confirm compliance before submission
For many businesses, keeping on top of wage compliance across multiple employees can quickly become time-consuming. Having a clear payroll process and regular checks in place can make a significant difference in reducing risk and avoiding errors.
Important Note for Director-Only Payrolls
If you run a director-only payroll, the system may flag non-compliance depending on how working hours are set in the pay template.
This is often a technical issue rather than a real underpayment. If you are unsure, it is best to review settings or seek clarification before making changes.
What to Do If Employees Need a Pay Increase
If any employees fall below the new minimum wage, action must be taken immediately.
The simplest approach is to:
- Update employee pay rates
- Apply changes from the correct effective date
- Document the adjustment clearly
If you’re unsure whether changes are needed, or want a second pair of eyes before updating salaries, getting guidance from a UK tax and accounting expert can help ensure everything is applied correctly and on time.
Statutory Sick Pay (SSP) Changes Explained
Alongside wage increases, SSP rules have been significantly updated to expand access and simplify the process.
1. SSP Now Starts from Day One
Previously, employees had to wait three qualifying days before receiving SSP.
This waiting period has now been removed.
What this means:
- Employees are eligible for SSP from the first day of sickness
- Employers must adjust payroll calculations accordingly
2. All Employees Are Now Eligible
The Lower Earnings Limit (LEL) requirement has been removed.
Previously, employees needed to earn above a minimum threshold to qualify for SSP. That restriction no longer applies.
Now: All employees qualify for SSP, regardless of earnings level
This is a major shift and increases employer responsibility, particularly for part-time or lower-paid staff.
3. New Rule for Lower Earners
For employees with lower earnings, SSP is now calculated differently.
They will receive:
- 80% of their average weekly earnings, or
- The standard SSP rate
Whichever is lower.
This ensures fairer support while maintaining a cap on employer liability.
What the SSP Changes Mean for Employers
These updates require immediate attention to payroll processes.
Key considerations:
- Sick pay calculations must be updated
- Payroll systems need to reflect day-one entitlement
- All employees must be included in SSP eligibility checks
- Policies and employee communications may need updating
If these changes are not implemented correctly, it can result in:
- Incorrect payments
- Employee disputes
- Compliance risks
With these changes expanding eligibility and removing previous thresholds, payroll processes may need to be reviewed to ensure calculations are accurate and consistent across all employees.
Common Mistakes to Avoid
With multiple changes happening at once, it is easy to overlook key details.
Here are the most common pitfalls:
1. Missing Apprentice Transitions
Failing to move apprentices onto age-based rates after year one.
2. Incorrect Hourly Calculations
Especially when converting from annual salaries.
3. Ignoring Director Payroll Flags
Misinterpreting software warnings without checking setup.
4. Delayed Salary Updates
Waiting too long to implement required increases.
5. Not Updating SSP Processes
Continuing to apply the old three-day waiting rule.
A Simple Checklist for Employers
To stay compliant, work through this checklist:
- Review all employee pay rates
- Confirm apprentices are on correct wages
- Use payroll tools to check compliance
- Update salaries where required
- Submit changes via the addition portal
- Adjust SSP settings and processes
- Communicate changes internally if needed
Final Thoughts
The changes introduced from 1 April are designed to improve fairness for employees, but they also increase the responsibility on employers to ensure payroll is accurate and up to date.
By reviewing your payroll now and making any necessary adjustments, you can avoid compliance issues and keep everything running smoothly.
If you’re unsure where to start, or want confidence that everything is set up correctly, having the right support in place can make managing payroll changes far more straightforward.
Book a free 30-minute chat with our team to review your payroll setup, sense-check any changes, and make sure everything is compliant moving forward.
