As April 2026 approaches, UK employers are preparing for a series of statutory changes that will directly affect payroll costs and workforce planning. From increases to the National Living Wage and National Minimum Wage, to higher statutory family-related pay and changes to Statutory Sick Pay, these updates represent more than routine annual uplifts. Taken together, they have the potential to significantly increase the overall cost of employment.
From an accounting firm’s perspective, early awareness and proactive planning are essential. Employers that understand the combined impact of these changes are better positioned to manage cash flow, update systems, and remain compliant without disruption.
- National Living Wage and National Minimum Wage Increases
From 1 April 2026, the Government has confirmed increases to both the National Living Wage and National Minimum Wage following recommendations from the Low Pay Commission.
The National Living Wage, which applies to workers aged 21 and over, will increase to £12.71 per hour. Increases will also apply across younger age bands and to apprentices. While these changes are designed to support low-paid workers and reflect wider cost-of-living pressures, they also create immediate cost implications for employers, particularly those operating in labour-intensive sectors.
Current rates
The rates change on 1 April every year.
| 21 and over | 18 to 20 | Under 18 | Apprentice | |
|---|---|---|---|---|
| April 2025 | £12.21 | £10 | £7.55 | £7.55 |
| April 2026 | £12.71 | £10.85 | £8 | £8 |
For businesses, the impact extends beyond hourly pay. Wage increases can affect overtime costs, pension contributions, employer National Insurance, and internal pay structures where employers aim to preserve differentials between roles.
- Increases to Statutory Family-Related Pay
In addition to wage changes, statutory family-related payments will also rise from April 2026. Statutory maternity, paternity, adoption, shared parental, parental bereavement, and neonatal care pay will increase to £194.32 per week, or 90 percent of an employee’s average weekly earnings if lower. This represents an increase from the previous weekly rate of £187.18.
While statutory payments are largely recoverable, they still affect payroll administration and short-term cash flow. Employers should ensure that payroll systems are updated correctly and that HR and finance teams are aligned on how these changes are applied in practice.
For organisations with a higher proportion of employees taking family leave, these increases may also influence workforce planning and budgeting for the 2026 to 2027 tax year.
- Statutory Sick Pay Changes
Statutory Sick Pay will also increase from April 2026, rising from £118.75 to £123.25 per week. SSP remains payable by employers and processed through payroll, making it another area where system readiness and policy clarity are important.
For employers, SSP is not only a compliance matter but also part of broader absence management. Even modest increases can have a cumulative impact across a workforce, particularly when combined with other employment cost pressures.
Understanding the Combined Impact on Employment Costs
While each of these changes may appear manageable in isolation, the combined effect can be significant. Wage increases, higher statutory payments, employer National Insurance, pension contributions, and wider employment law changes all contribute to rising employment costs.
From our experience advising UK businesses, challenges often arise when employers focus on individual changes rather than assessing their total financial impact. Forecasting, scenario planning, and timely payroll updates are key to avoiding surprises once the new rates come into force.
Practical Steps Employers Can Take Now
With April 2026 fast approaching, employers should consider taking the following steps:
- Review payroll software and confirm that updates for new rates will be applied automatically
- Model the financial impact of wage and statutory pay increases on budgets and cash flow
- Review employment contracts, policies, and internal pay structures
- Ensure HR, payroll, and finance teams are aligned on implementation
Early preparation allows employers to manage change confidently rather than reactively.
How We Can Help
Navigating statutory changes is an ongoing responsibility for UK employers. From understanding how new rates apply to forecasting their impact on your business, the right professional support can make a meaningful difference.
If you would like to discuss how the April 2026 changes may affect your organisation, or if you need support with payroll planning and compliance, please contact Faye Lusted for more information. Our team would be happy to help you prepare with confidence.
SOCIAL COPY (FOR MARCH 2026)
April 2026 Employment Cost Changes: What UK Employers Need to Know Now
From April 2026, UK employers will see a series of statutory changes that directly affect payroll and employment costs. Increases to the National Living Wage and National Minimum Wage, higher statutory family-related pay, and changes to Statutory Sick Pay mean that employment costs will rise across multiple areas at the same time. Read the full article here: [Insert article link]
If you would like to discuss how these changes may impact your organisation or need support with payroll planning and compliance, please reach out to Faye Lusted for more information.
#UKEmployment #PayrollUpdates #NationalLivingWage #StatutoryPay
#EmployerCompliance #UKBusiness #PayrollPlanning
