UK Payroll Clinic

Statutory payments are the part of payroll where employers act as the government's paying agent: you pay the employee, then reclaim or offset according to the rules. Get the rates or the admin wrong and you either underpay staff or overpay HMRC. Here is the 2026/27 picture. Statutory Sick Pay SSP is paid from the fourth qualifying day of absence, at the flat weekly rate set each April. Employers cannot reclaim SSP; it is a cost of employment. The admin that matters: accurate absence records, because SSP calculations live or die on the dates, and keeping the fit-note evidence on file. Statutory Maternity Pay SMP runs for up to 39 weeks: 90 percent of average weekly earnings for the first 6 weeks, then the flat statutory rate (or 90 percent of earnings if lower) for 33 weeks. Employers reclaim 92 percent of SMP paid (103 percent for small employers eligible for Small Employers Relief). The reclaim goes through the Employer Payment Summary, reducing your PAYE bill. Get the EPS right o...

National Minimum Wage 2026: the rates and the record-keeping rules   The rates move every April, the rules do not Almost every worker in the UK is entitled to the National Minimum Wage or the National Living Wage, and the rates rise each April. Underpaying, even accidentally and even by pennies, exposes employers to arrears, penalties of up to 200% of the amount owed, and public naming by the government. Most breaches are not deliberate exploitation; they are payroll errors, misunderstood deductions and poor records. This guide covers the rates in force and the record-keeping discipline that keeps employers safe. The rates: what applies now The rates below are the published rates applying from April 2025. New rates for April 2026 are set in the Autumn Budget each year, so check the current figures at gov.uk before running April payroll: National Living Wage, age 21 and over: £12.21 per hour. Age 18 to 20: £10.00 per hour. Age 16 to 17: £7.55 per hour. Apprentice rate: £7.55...

  For years, payrolling benefits in kind has been optional. Employers could report most benefits through the payroll, taxing them in real time, or stick with the familiar P11D at year end. That choice is ending. HMRC has confirmed that payrolling benefits will become mandatory from April 2026, and employers who still run benefits through P11Ds need to start preparing now. The change is simple in concept and fiddly in practice, which is exactly why it deserves attention well before the deadline. What mandatory payrolling means Under the current voluntary system, an employer registers with HMRC to payroll specific benefits, and the cash equivalent of those benefits is added to the employee's taxable pay each period, with tax collected through PAYE. No P11D is needed for payrolled benefits. From April 2026, that treatment becomes the default for almost all benefits in kind: company cars, private medical insurance, gym memberships, beneficial loans, accommodation and the rest will al...

Student Loan Deductions Through Payroll: The Plan Types Student loan deductions are one of those quiet payroll tasks that cause loud problems when they go wrong. Get the plan type wrong and you under-deduct (HMRC will notice) or over-deduct (the employee definitely will). Here is a practical guide to the plan types and what employers have to do. Why the plan type matters Student loan repayments are not one flat rule. HMRC operates several repayment plans, each with its own annual threshold and rate. Two employees on the same salary can owe completely different deductions depending on when and where they studied. The plan type comes from the employee or from HMRC; employers do not get to guess. The four plan types Plan 1 Plan 1 covers most borrowers who started their course before 1 September 2012 in England and Wales, plus all borrowers from Northern Ireland and Scotland regardless of start date. Deductions are 9% of earnings above the Plan 1 threshold, which the government...