The 2025/26 Tax Year Is Almost Here – Are You Ready? Everything Payroll Teams, Employers, and Accountants Need to Know

The UK tax year resets on 6 April 2025, and with just days to go, it’s time to make sure you’re fully prepared for the changes. Whether you’re a seasoned payroll professional, a small business owner, or an accountant supporting multiple clients, staying on top of updated rates and thresholds is essential to ensuring compliance, avoiding errors, and starting the new tax year smoothly.

In this blog, we’ll walk you through the key updates affecting payroll for the 2025/26 tax year—and what you need to do now to get ready.

1. Income Tax Thresholds and Tax Codes

While many income tax thresholds remain frozen under the government’s fiscal drag strategy, there may still be changes affecting individuals in Scotland or those with specific tax codes.

Key action:

• Ensure all employees’ tax codes are updated correctly using the P9X notice from HMRC.

• Watch for Scottish or Welsh tax codes, which can vary from the standard UK bands.

2. National Insurance Contributions (NICs)

The employee NIC rate was reduced during the 2024/25 tax year—check for any further changes to thresholds or rates for 2025/26.

Don’t forget:

• The Secondary Threshold for employers and Class 1A/1B NICs for benefits may be adjusted.

• Directors may have different NI calculations using the annual earnings period.

3. Statutory Payments

Rates for statutory payments such as maternity, paternity, adoption, shared parental, and sick pay are usually updated each April.

2025/26 weekly rates (example - adjust once official rates confirmed):

• Statutory Maternity Pay (SMP): £184.03 or 90% of average weekly earnings (whichever is lower)

• Statutory Sick Pay (SSP): £116.75 per week

What to do:

• Update your payroll software and policies.

• Communicate changes clearly to line managers and employees.

4. Student Loan and Postgraduate Loan Thresholds

Each plan type has its own repayment threshold and rate.

For 2025/26 (example - confirm with HMRC):

• Plan 1: £24,990

• Plan 2: £27,295

• Plan 4 (Scotland): £31,395

• Postgraduate Loans: £21,000

Tip:

• Ensure you’re using the correct plan based on starter checklist or HMRC data.

5. P60s and Year-End Reporting

You must provide P60s to all employees still employed as of 5 April by 31 May 2025.

Your final Full Payment Submission (FPS) and Employer Payment Summary (EPS) for the year must be submitted on time.

6. New Legislation or Regional Rules

Keep an eye on any region-specific changes, such as devolved tax decisions in Scotland and Wales, or adjustments to minimum wage and holiday pay legislation following tribunal rulings or government reforms.

Final Checklist

Before 6 April:

• Update payroll software with new rates and thresholds

• Apply new tax codes from HMRC

• Review and communicate statutory payment changes

• Prepare P60s and final submissions

• Review employee benefits and any tax implications

Need Help Navigating the New Tax Year?

Whether you’re managing payroll in-house or providing support to clients, staying informed is key to success. Our team is here to help you adapt, remain compliant, and hit the ground running in 2025/26.