Employment taxes continue to be an area where small changes can have a big impact if they’re missed. As we move towards 2026/27 and beyond, there are several updates employers should be aware of – some immediate, others on the horizon.
National Insurance Contributions: rates unchanged, costs still rising
For employees, NICs remain unchanged for 2026/27:
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No NICs on the first £12,570
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8% on earnings between £12,570 and £50,270
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2% on earnings above £50,270
For employers, NICs continue at 15% on earnings above £5,000 per employee.
The employment allowance remains at £10,500 for eligible businesses, helping to offset part of this cost.
There are higher thresholds for employees under 21 and apprentices under 25, and other variations can apply, so payroll accuracy remains essential.
Salary sacrifice pensions: major change coming in 2029
From 6 April 2029, the NIC exemption for employee pension contributions made via salary sacrifice will be capped at £2,000 per year.
Any salary sacrifice contributions above this amount will:
Salary sacrifice remains valuable, but this change will reduce the NIC advantage for higher contributions and should be factored into longer-term remuneration planning.
Homeworking tax relief removed from April 2026
From 6 April 2026, employees will no longer be able to claim tax relief on unreimbursed homeworking expenses.
The long-standing £6 per week flat-rate claim will be withdrawn.
Employers can still:
This shifts responsibility firmly onto employers to decide whether and how homeworking costs are supported.
EMI schemes: a big win for growing companies
The Enterprise Management Incentive (EMI) scheme is being significantly expanded for options granted on or after 6 April 2026.
Key changes include:
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Company option limit increasing from £3 million to £6 million
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Gross asset limit increasing from £30 million to £120 million
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Employee limit increasing from 250 to 500
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Maximum option life extending from 10 to 15 years
In many cases, these changes can also apply to existing EMI options that have not yet been exercised or expired.
From April 2027, the requirement to notify HMRC of EMI grants will be removed, reducing administration.
For growth-focused businesses, this makes EMI a much more accessible and powerful retention tool.
Expanded tax-free workplace benefits
From 6 April 2026, income tax and NIC exemptions will be extended to cover employer reimbursements for:
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Eye tests
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Homeworking equipment
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Flu vaccinations
This gives employers more flexibility to support staff wellbeing without increasing tax costs.
Company cars and benefits in kind
The move to bring employee car ownership schemes (ECOS) fully into benefit-in-kind rules has been delayed until 6 April 2030, with transitional arrangements running to April 2031.
For plug-in hybrid vehicles:
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A temporary BIK easement applies from 1 January 2025 to 5 April 2028
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This prevents sharp tax increases due to new emissions standards
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Transitional rules may apply until 5 April 2031
BIK charges for vans and fuel will increase in line with inflation from April 2026.
Mandatory payrolling of benefits delayed
Mandatory payrolling of benefits in kind will now begin from April 2027, rather than April 2026.
Although delayed, HMRC is clear that employers should start preparing early. Updating payroll processes, software and internal controls will take time, and last-minute changes are likely to be costly.
PAYE changes for umbrella companies
From 6 April 2026, where umbrella companies are used:
This significantly increases risk for businesses engaging workers through umbrella arrangements and makes due diligence more important than ever.
Loan charge review and settlement opportunity
Disguised remuneration schemes remain tax avoidance and have been repeatedly challenged in the courts.
Following an independent review, the government will introduce a new settlement opportunity for outstanding loan charge cases.
Key points include:
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A £5,000 reduction in outstanding liabilities for anyone who settles
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Many individuals could see liabilities reduced by 50% or more
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Around 30% of people may settle without paying anything
This applies retrospectively from 5 April 2019.
Anyone affected should seek advice before engaging with HMRC.
What employers should be doing now
Employment taxes are becoming more complex, not less. The common thread across all of these changes is preparation.
At A&C Chartered Accountants, we help employers:
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Keep payroll compliant and up to date
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Review benefits and remuneration structures
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Prepare for payrolling of benefits
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Navigate EMI schemes and incentive planning
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Reduce risk around PAYE and HMRC scrutiny
If you want clarity on how these changes affect your business or workforce, now is the right time to review things properly rather than react later.