Payroll Costs 2026 – What Employers Must Do Now

If you run a business, your payroll costs have increased from April 2026.

Many business owners are seeing higher staff costs, tighter margins, and pressure on cash flow.

This is not temporary. It is a permanent change in employer costs.

This guide explains what has changed and what you should do now.

What changed in April 2026

Two key updates:

• National Living Wage increased to £12.71 per hour
• Employer National Insurance increased to 15%

These changes increase your cost per employee.

What this means for your business

Your staff cost includes more than wages:

• Basic pay
• Employer National Insurance
• Pension contributions
• Holiday pay

Even a small increase in hourly rates can significantly impact your annual costs.

Example

A full-time employee now costs more due to:

• Higher hourly rate
• Increased employer NIC

Across a team, this can add thousands per year.

Common problems

Many businesses:

• Do not update payroll correctly
• Underestimate total employee cost
• Do not adjust pricing
• Ignore profit impact
• Miss compliance rules

This leads to reduced profit and potential penalties.

What you should do now

1. Review payroll

Ensure all employees meet minimum wage rules.

2. Calculate true costs

Include all employer costs, not just wages.

3. Review pricing

Higher costs may require price adjustments.

4. Improve efficiency

Review staff hours and productivity.

5. Stay compliant

Avoid HMRC penalties by keeping payroll accurate.

How we help

We support businesses with:

• Payroll setup and processing
• Minimum wage compliance
• Cost planning
• Cash flow support
• Ongoing payroll services

Take action

Payroll costs have increased. You need to adapt.

A simple review can protect your profit and reduce risk.