Payroll Year End (PYE) 2026: preparing your business 

Is your business ready for Payroll Year End (PYE) 2026?

Manual work, disconnected systems and last-minute surprises can often make PYE feel painful.

Don’t worry!

Whether you’re a seasoned payroll professional or tackling it for the first time, we can help.

In this blog, we cover everything you need to know about Payroll Year End, as well as offering some advice to make this year as smooth as possible.

What is Payroll Year End?

For those less familiar with PYE, let’s first cover the basics, ensuring you are fully prepared for what’s to come. 

The tax year in the UK runs from 6 April of one year to 5 April of the following year. 

Payroll Year End is the annual process of closing your pay records with HM Revenue & Customs (HMRC) for the tax year just ended and preparing to start the new one. 

In this final submission process, you are required to submit information to HMRC, such as your Full Payment Submissions (FPS) and Employer Payment Submissions (EPS).  

This process finishes with you giving every employee their P60 statement. 

What are your Payroll Year End responsibilities?

Your main Payroll Year End responsibilities include: 

• Reporting to HMRC on the previous tax year (ending on 5 April) 
• Providing employees with their P60s 
• Preparing for the new tax year, which starts on 6 April 

Payroll Year End helps ensure that both employers and employees have accurate and up-to-date tax information for the preceding tax year. 

2026 Payroll Year End checklist

When it comes to preparing your business, use the following as a guide for your Payroll Year End process:

• Step 1: check when your payroll ends 
• Step 2: check for leavers or new starters 
• Step 3: process your final pay run 
• Step 4: process your year end 
• Step 5: get your P60s ready 
• Step 6: check the P9X and start your new payroll year 

Key Payroll Year End 2026 dates  

When it comes to Payroll Year End, here are the most important dates you need to remember: 

• 5 April: the tax year ends – all payroll records for the preceding year must be finalised by this date 
• 6 April: the new tax year begins – your payroll software must be updated, and new tax codes and thresholds applied 
• On or before your employees’ payday: send your final FPS payroll report of the year 
• By 19 April: the final statutory deadline for submitting the end-of-year FPS and any EPS reports for the tax year just ended 
• By 31 May: the deadline to give your current employees their P60s 
• By 6 July: report employee expenses and benefits by submitting P11D and P11D(b) forms online if they aren’t being processed through payroll 
• By 19 July: pay Class 1A NICs on P11D benefits via post 
• By 22 July: pay Class 1A NICs on P11D benefits electronically 

Top tip: add these dates to your calendar, make a note of them, scribble them down on a sticky note – whatever it takes, keep these dates front-of-mind! 

Payroll Year End 2026: legislative changes

Payroll Year End 2026 brings a range of legislative changes you need to be aware of.

See the upcoming legislative changes below.

2026-2027 National Minimum Wage (NMW) and National Living Wage (NLW)

The National Minimum Wage and National Living Wage are the minimum pay per hour that almost all workers are entitled to by law.

These rates apply from 1 April 2026.

Use the National Minimum Wage calculator to check if you’re paying a worker the National Minimum Wage or if you owe them payments from past years.

Note: you can find rates for previous years here.

Income Tax bands and rates for England, Wales and Northern Ireland 2026-2027

For England, Wales and Northern Ireland, Income Tax bands for 2026-2027 remain as follows:

Income Tax bands and rates for Scotland 2026-2027

For Scotland, Income Tax bands for 2026-2027 are as follows:

2026-2027 National Insurance Contributions (NICs)

Summary of National Insurance changes for 2026/2027

As expected, the freeze on National Insurance thresholds has been extended.  

The Autumn Budget confirmed that these thresholds will remain frozen until April 2031. 

What this means is that as pay increases, employees may find themselves moving into higher-rate tax and National Insurance bands more quickly.

2026-2027 Statutory Payment rates

These rates apply from 6 April 2026.

Note: Statutory Sick Pay will no longer have the 3 waiting days or the LEL as entitlement triggers due to the changes being brought into force from 6 April to SSP by the Employment Rights Act 2025.

Statutory Parental Bereavement Leave & Pay (SPBP): Northern Ireland​

Effective from April 2026, there’s an extension of SPBP to miscarriages prior to 24 weeks of pregnancy for employees gainfully employed in Northern Ireland only.

RTI changes to FPS and EPS.

Student Loan and Postgraduate Loan Rates and Thresholds 2026 to 2027

Percentage rates are at 9% for Student Loan Plans 1, 2, 4 or 5, and Postgraduate Loan are at 6%.          

• Student Loan Threshold Plan Type 1: £26,900
• Student Loan Threshold Plan Type 2: £29,385​
• Student Loan Threshold Plan Type 4: £33,795​
• Student Loan Threshold Plan Type 5: £25,000​
• Postgraduate Loan Threshold: £21,000 – no change from previous year

Senior Product Manager David Kisiaky told us: “One of the headlines for April 2026 is the introduction of a new Student Loan Plan, known as Plan Type 5.

“This will apply to students who began their undergraduate or Postgraduate Certificate of Education (PGCE) courses on or after 1 August 2023.

“Under this plan, repayments will be set at 9% on any earnings above £25,000 per year.

“HMRC may issue notices to change it to Plan 1 for those who started their courses before 1 September 2012, or Plan 2 for those who took out loans between 1 September 2012 and 31 July 2023.

“Additionally, the repayment threshold for Student Loan Plan 2 will be frozen at £29,385 from April 2027 for three years.”

Dividend tax increase 

Starting April 2026, the rate of tax paid on dividend income is increasing: 

• The basic rate is rising from 8.75% to 10.75% 
• The higher rate is rising from 33.75% to 35.75% 

Directors with a combination of dividends and salary will need to recalculate their earnings.  

Payrolling benefits  

Mandatory payrolling of benefits has been postponed by a year to April 2027. 

Employment Rights Act 2025: Statutory Sick Pay changes

The three waiting days for SSP will be removed, meaning employees will no longer need to wait until the fourth day to claim sick pay.

Additionally, the Lower Earnings Limit (LEL) threshold will be abolished, making SSP accessible to more employees.

Employment Rights Act 2025: day-one paternity leave 

Currently, employees must complete 26 weeks of employment to qualify for paternity leave.

This waiting period will be removed, making paternity leave a day-one right. 

Employment Rights Act 2025: unpaid parental leave 

At present, employees must be in employment for one year to qualify for unpaid parental leave.

This will also become a day-one right, allowing employees to apply for it from the start of their employment. 

Annual Benefit-in-Kind (BIK) changes

Company car benefit tax rates were frozen between 2022 and 2025.​

New rates for 2025/26, 2026/27 and 2027/28 are as per the HMRC Rates, as legislated in the Finance Act 2023.

2026-2027 Auto Enrolment (AE) thresholds ​

The parameters are the same as last year​.

Employment allowance  ​

The maximum amount that can be claimed via Employment Allowance is retained at £10,500​.

Small Employers Relief: compensation percentage increased  

Employers in previous tax years could reclaim 92% of employees’ Statutory Maternity, Statutory Paternity, Statutory Adoption, Statutory Parental Bereavement and Statutory Shared Parental Pay.  

If a business has paid £45,000 or less in Class 1 National Insurance (ignoring any reductions like Employment Allowance) in the last complete tax year, they can qualify for Small Employers Relief and reclaim 100% of the Statutory Payment and an additional % compensation.  

From 6 April 2026, the rate of compensation will increase from 8.5% to 9%.  

Employers who qualify for Small Employers Relief will therefore be able to reclaim 109% from HMRC from 6^th April 2026.  

The new 9% compensation rate will apply to the following Statutory Payments:  

• Statutory Maternity Pay  
• Statutory Paternity Pay  
• Statutory Adoption Pay  
• Shared Parental Pay  
• Statutory Parental Bereavement Pay  
• Statutory Neonatal Care Pay  

 The Small Employers Relief threshold will remain at £45,000.  

Common Payroll Year End challenges

Navigating Payroll Year End can be tough.

Common pitfalls that can disrupt your processes include:

• Disparate data: inaccurate or outdated employee records can lead to tax miscalculations, underpayments or compliance fines
• Excessive admin: manual processes for tasks like distributing P60s or submitting payroll data to HMRC can be time-consuming and error-prone
• Tax code changes: tax codes frequently change due to updates from HMRC or shifts in employee circumstances – missing these updates can cause payroll chaos

Five Payroll Year End tips

For a stress-free Payroll Year End, follow these tips:

1. Know your deadlines: mark important deadlines like 5 April for finalising payroll records and 31 May for distributing P60s
2. Audit your data: review details for new hires, leavers and benefit adjustments
3. Submit final reports carefully: double-check your Full Payment Submission (FPS) and Employer Payment Summary (EPS) before submitting, as errors here can be difficult to fix later
4. Stay updated on legislation: use reliable resources or payroll software that updates automatically to ensure compliance
5. Master the basics: ensure all staff details, pay records and year-to-date figures are accurate

The Payroll Year End (PYE) Survival Guide 2026

Hopefully, the above has offered a starting point for tackling Payroll Year End 2026.

Looking for further support? Our 2026 Payroll Year End Survival Guide is on hand to help.

The guide offers tips and advice, covering:

• What is Payroll Year End?
• Understanding the risks
• Payroll Year End survival tips
• Frequently asked questions
• And more

How IRIS can help

As a trusted payroll provider, we have a wide array of payroll solutions which can suit the needs of any business.

Whether you want software to manage payroll in-house or would prefer to outsource the responsibility, we have you covered.

Payroll Year End: Frequently Asked Questions (FAQs)

Q: When is the Payroll Year End deadline?

In the UK, the HMRC deadline for payroll year end falls on 5 April, marking the conclusion of the tax year.

Q: What happens if I miss the Payroll Year End deadline?

Missing the UK Payroll Year End deadlines can lead to monthly penalties from HMRC.

 Penalty amounts: You’ll be charged based on the number of employees:

• 1-9 employees: £100 per month
• 10-49 employees: £200 per month
• 50-249 employees: £300 per month
• 250+ employees: £400 per month

If you run multiple PAYE schemes, you can be penalised for each one.

Q: What is a P60, and who needs to receive it?

P60s are an end-of-tax-year summary of an employee’s earnings and deductions, such as National Insurance contributions.

Businesses are required to provide all employees who were on the payroll at the end of the tax year a P60s.

Payroll Year End 2025: click here to view our blog from last year.

*Please note, this blog does not constitute legal advice. While every effort has been made to ensure this information is correct, please check with HMRC if unsure.