UK payroll legislation is not one law but a stack of obligations an employer must run together: PAYE withholding reported to HMRC in real time, employer National Insurance, National Minimum Wage floors that change every April, statutory payments and automatic enrolment into a workplace pension. Each piece has its own thresholds and its own enforcement, and the figures below are the ones in force for the 2026-27 tax year, taken from the GOV.UK pages cited at the end. Any provider running UK payroll for you, local or through an employer of record, is being paid to keep this stack right.
PAYE and real time reporting
PAYE is HMRC's system for collecting Income Tax and National Insurance from employment. An employer must operate it once any employee earns at or above the lower reporting trigger (currently £96 a week), receives expenses or benefits, has another job or receives a pension. The defining feature is timing: payments and deductions must be reported to HMRC on or before each payday through Full Payment Submissions, not summarised after the fact. Deductions taken through payroll include Income Tax, employee National Insurance, student loan repayments and pension contributions. Employers pay HMRC what they owe monthly, though a small employer expecting to owe under £1,500 a month can arrange quarterly payment.
National Insurance in 2026-27
Employer (secondary) Class 1 National Insurance runs at 15% on each employee's earnings above the secondary threshold, which for 2026-27 sits at £96 a week, £417 a month or £5,000 a year. The employee side is withheld through payroll with its own thresholds: the personal allowance equivalent for tax sits at £12,570 a year and the upper earnings limit at £50,270. Eligible employers can offset up to £10,500 of employer National Insurance liability in the year through the Employment Allowance. Because the employer rate applies from a low threshold, it is the single biggest statutory on-cost above gross salary in a UK employment quote, and any per-employee price that omits it is understating the real cost.
National Minimum Wage from April 2026
The wage floor changes every April and is age-banded. From April 2026 the rates are £12.71 an hour for workers aged 21 and over, £10.85 for 18 to 20 year olds, and £8.00 for under-18s and apprentices. The apprentice rate only applies to apprentices under 19, or 19 and over in the first year of their apprenticeship; after that first year an older apprentice moves to the full rate for their age. Minimum wage compliance is calculated over pay reference periods rather than per payslip line, so deductions, unpaid working time and salary sacrifice arrangements can push an apparently compliant wage below the floor. HMRC enforces this actively and names non-compliant employers.
Pensions automatic enrolment
Employers must automatically enrol eligible workers into a workplace pension and contribute to it. The statutory minimum contribution is 8% of qualifying earnings, of which the employer must pay at least 3%, applied to the band of earnings between £6,240 and £50,270 a year; scheme rules can and often do set more. Auto-enrolment is a duty on the employer, not an option for the employee to request, and it comes with re-enrolment and declaration duties that recur. Together with employer National Insurance this is the second standing on-cost that belongs in any honest per-employee cost calculation. Figures change at least annually; verify against the cited GOV.UK pages before relying on them, and treat nothing here as legal or tax advice.
Questions people ask about uk payroll legislation
What must be reported to HMRC each payday?
Employee payments and deductions, on or before the day of payment, via real time Full Payment Submissions, plus notifications when employees join or their circumstances change.
What does employer National Insurance cost in 2026-27?
15% of each employee's earnings above the secondary threshold of £5,000 a year (£96 a week), before any Employment Allowance offset of up to £10,500 for eligible employers.
What is the minimum wage for an adult in 2026?
£12.71 an hour from April 2026 for workers aged 21 and over, with lower bands of £10.85 for 18 to 20 year olds and £8.00 for under-18s and eligible apprentices.
What pension contribution must an employer make?
At least 3% of qualifying earnings between £6,240 and £50,270, within a total minimum contribution of 8%; the employee side usually makes up the balance unless the scheme is more generous.