What is the 2026/27 UK primary threshold for Employee National Insurance?

For the 2026/27 tax year, the Primary Threshold for Employee Class 1 National Insurance remains aligned with the personal tax allowance at 12,570 GBP per annum. Employees earning above this amount will see deductions of 8 percent on earnings up to the Upper Earnings Limit of 50,270 GBP, while earnings above that limit are taxed at 2 percent.

How much is the UK Employment Allowance for small businesses in 2026?

In 2026, eligible UK small companies can claim an Employment Allowance of 5,000 GBP. This allowance is deducted from the total Class 1 Employer National Insurance contributions throughout the tax year. To qualify, your company's total secondary Class 1 NIC liabilities in the previous tax year must have been under 100,000 GBP, and the company must not be a single-director firm with no other employees.

When must I submit my Full Payment Submission (FPS) to HMRC in 2026?

Under Real Time Information (RTI) rules in 2026, you must submit a Full Payment Submission (FPS) to HMRC on or before the date you pay your employees. This is a strict requirement. If you pay employees monthly on the last Friday of every month, your digital FPS must be transmitted via payroll software or an agent by that same Friday to avoid late filing penalties.

What are the 2026 UK auto-enrolment pension contribution rates?

For the 2026/27 period, the total minimum contribution into a workplace pension remains at 8 percent of qualifying earnings. Employers are legally required to contribute a minimum of 3 percent, while the employee contributes the remaining 5 percent. Employers must complete a declaration of compliance with The Pensions Regulator within five months of their staging or duties start date.

Can a UK company director be paid via dividends alone in 2026?

While a director can choose to be paid only via dividends, it is often not the most tax-efficient route in 2026. Most directors take a small salary up to the Lower Earnings Limit to maintain their State Pension contribution record without actually triggered NIC payments. Any salary above the 12,570 GBP threshold will require a formal PAYE scheme registration and monthly RTI reporting, regardless of the dividend amount.

2026 UK PAYE and Payroll Guide for Small Companies

TL;DR: UK payroll in 2026 requires Real Time Information (RTI) reporting via a Full Payment Submission (FPS) on or before every payday. Small companies benefit from the 5,000 GBP Employment Allowance to offset Employer National Insurance, provided they meet eligibility criteria beyond single-director setups.

2026 UK Payroll and PAYE Compliance Overview

Operating a small company in the United Kingdom during 2026 carries significant administrative responsibilities regarding UK PAYE and payroll. As a UK Ltd company, you are acting as an agent for His Majesty's Revenue and Customs (HMRC), collecting income tax and National Insurance Contributions (NICs) from employees and directors. The 2026/27 tax year maintains the strict Real Time Information (RTI) framework, meaning every payment made to staff must be reported digitally the moment it occurs.

Failure to maintain an accurate payroll system can result in significant penalties. For entrepreneurs, the primary challenge is balancing tax efficiency (salary versus dividends) with the legal requirements of the UK employment law and the Pensions Act. Every UK company that pays staff above the Lower Earnings Limit (LEL) of 123 GBP per week must register for a PAYE scheme.

Understanding 2026 Tax Codes and National Insurance

In 2026, the standard personal allowance is 12,570 GBP, represented by the tax code 1257L for most employees. This is the amount an individual can earn before paying any income tax. For earnings above this, the UK operates a tiered system: the basic rate of 20 percent, the higher rate of 40 percent, and the additional rate of 45 percent for income over 125,140 GBP.

National Insurance Thresholds for 2026/27

National Insurance is split into Employee (Class 1 Primary) and Employer (Class 1 Secondary) contributions. The table below outlines the key weekly thresholds for the 2026/27 tax year:

Threshold Type	Weekly Amount	Purpose
Lower Earnings Limit (LEL)	123 GBP	Qualifies employee for State Pension benefits
Primary Threshold (PT)	242 GBP	Point at which employees start paying 8% NICs
Secondary Threshold (ST)	175 GBP	Point at which employers start paying 13.8% NICs
Upper Earnings Limit (UEL)	967 GBP	Point at which employee NICs drop to 2%

Small business owners should note that while the Primary Threshold is aligned with the income tax allowance, the Secondary Threshold remains lower. This means employers often start paying National Insurance on an employee's salary before the employee starts paying income tax.

Real Time Information (RTI) and Filing Deadlines

The 2026 RTI regime remains the backbone of HMRC's data collection. There are two primary filings that every UK employer must master: the Full Payment Submission (FPS) and the Employer Payment Summary (EPS).

Full Payment Submission (FPS)

This is the most frequent filing. You must send an FPS to HMRC every time you pay your employees. It includes details of their gross pay, tax deductions, NICs, and student loan repayments. In 2026, HMRC's automated systems are highly sensitive. Filing even one day late can trigger an automatic penalty starting at 100 GBP per month for small companies with fewer than 10 employees.

Employer Payment Summary (EPS)

You file an EPS if you need to reclaim statutory payments (like maternity pay) or if you are claiming the Employment Allowance. Crucially, if you do not pay anyone in a specific tax month, you must file a Nil EPS by the 19th of the following month to stop HMRC from issuing estimated tax bills.

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2026 Pension Auto-Enrolment Requirements

Workplace pension compliance is a non-negotiable aspect of UK payroll in 2026. Every employer with at least one employee (who is not a director with a restricted contract) must assess their workforce for auto-enrolment. Employees aged between 22 and the State Pension age, earning over 10,000 GBP per year, must be automatically enrolled into a qualifying pension scheme.

As of 2026, the minimum contribution is 8 percent of qualifying earnings. The employer must contribute at least 3 percent, and the employee contributes 5 percent (which includes tax relief). You are also required to perform a Re-declaration of Compliance every three years to confirm to The Pensions Regulator that you are meeting your duties.

Director Salary Strategy for 2026

For startup founders and small company directors, Choosing the right salary level is a key part of tax planning. In 2026, many directors opt for a salary at the Secondary Threshold (9,100 GBP per year). At this level, the company pays no Employer NICs, and the director pays no Employee NICs or Income Tax, yet they still earn a qualifying year for their State Pension because they are above the Lower Earnings Limit.

If the company is eligible for the 5,000 GBP Employment Allowance, the director might instead choose a salary up to the Personal Allowance (12,570 GBP). While this would normally trigger Employer NICs, the Allowance covers the cost, effectively allowing for a higher tax-free salary withdrawal from the business.

2026 UK Payroll Compliance Checklist

Register for PAYE: Must be done before the first payday, but no earlier than two months before you start paying staff.
Verify Employee Status: Ensure all workers are correctly classified as employees rather than self-employed contractors to avoid IR35 complications.
Issue P60s: By 31 May 2026, you must give every employee who was working for you on 5 April 2026 a P60 summary of their earnings and deductions.
Report Benefits in Kind: Submit P11D forms by 6 July 2026 for any non-cash benefits provided to employees, such as private health insurance or company cars.
Pay HMRC: Remit the tax and NICs deducted to HMRC by the 22nd of the following month (if paying electronically).

How Gullia Filing Helps

Gullia Filing provides comprehensive UK payroll management, ensuring your RTI submissions are accurate and timely throughout the 2026 tax year. Our team handles PAYE registration, monthly FPS/EPS filings, and the calculation of 2026/27 National Insurance liabilities. We also support small companies with pension auto-enrolment administration and year-end P60 reporting to keep your business fully compliant with HMRC regulations.