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2026-27 Payroll Accord release notes

Shirley Bousfield
Updated
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2026/2027 tax year update

Contents

 

1. Introduction

  • This article contains a summary of the changes for 2026/2027 tax year.

  • New rates, as published on www.gov.uk will be automatically applied on to your system for the 2026/2027 tax year as soon as you apply the update and roll the system over to the new tax year.

 

2. Changes/updates

Rates and thresholds updated for the 2026/2027 tax year include:

  • Income tax thresholds for England, Northern Ireland, Wales, and Scotland
  • Student and Post Graduate loan thresholds
  • New Student Loan type 5
  • National Insurance limits, thresholds, and rates
  • Statutory payment rates for all parental leave types and sickness
  • National Minimum Wage and National Living Wage
  • Statutory payment compensation rate – increase from 8.5% to 9%
  • Welsh Arrestment orders

     

ACTION REQUIRED: 2.1 Employment Allowance

2.1.1 Employment Allowance check

  • From 6 April 2025, the maximum Employment Allowance was increased from £5,000 to £10,500 for eligible employers. Additionally, the previous restriction preventing employers with a secondary Class 1 National Insurance liability exceeding £100,000 in the previous tax year from claiming the allowance has been removed.
  • Please check the company is eligible to claim employment allowance for 2026/2027 tax year. If you have more than one payroll you can only claim Employment Allowance against one of the payrolls. If you are part of a group only one company in the group can claim the allowance. You will need to check full eligibility criteria with HMRC, https://www.gov.uk/claim-employment-allowance/eligibility.
  • Companies that are eligible for Employment Allowance will need to turn on this functionality for 2026/27.
  • To do this please set switches 3 switch 23 to 1.
  • This can be found in Settings -> Miscellaneous -> Parameters, switches 3 tab.

  • This will show employment allowance on the P32 report and allow selection of employment allowance claims on the RTI EPS return.

     

Parameters Switches 3-23 guidance

The following guidance explains what the various options are within these settings.

Set to 0

  • no employment allowance claimed for the company
  • P32: no EA shown and/or calculated
  • RTI PAYE: no EA shown and/or calculated
  • EPS: not possible to tick EA box, possible to force submit No

Set to 1

  • employment allowance claimed for the company as usually
  • P32: EA shown/calculated as usually (based on period ER NI)
  • RTI PAYE: EA shown/calculated as usually (based on YTD ER NI)
  • EPS: possible to tick EA box, possible to force re-submission Yes

Set to 2

  • employment allowance claimed for the company that was moved to Ciphr Payroll (Accord) mid tax-year (after April)
  • P32 - no EA shown/calculated
  • RTI PAYE – EA shown/calculated as usually (based on YTD ER NI)
  • EPS – possible to tick EA box, possible to force submit Yes

Set to 3

  • claimed employment allowance for the company will be calculated manually
  • P32: no EA shown/calculated
  • RTI PAYE: no EA shown/calculated
  • EPS: possible to tick EA box, possible to force re-submission Yes2.3
     

ACTION REQUIRED: 2.2 Support Statutory Parental Bereavement Pay for Northern Ireland

To pay Statutory Parental Bereavement Pay Northern Ireland (if required) please create 206000 SPBPNIRE wage type as shown below paying special attention to copy the values in the fields in red boxes. The wage type can be entered on the employee entry form on Transactions or Fixed Wage Types pages. 

The Statutory Parental Bereavement Pay Northern Ireland is recoverable at statutory rates and will automatically be shown on the following payroll reports:

  • Calculation Results
  • Payroll Run Details Report
  • P32 Reports
  • P35 Reports
  • FPS Submission Employee YTD Summary Report
     

2.3 Statutory payment compensation rate – increase

  • For the 2026/2027 tax year (starting April 2026), the Small Employers' Relief compensation rate is increasing to 9%. This applies to employers with less than £45,000 in Class 1 National Insurance, allowing them to claim back 100% of statutory parental payments (maternity, paternity, adoption, etc.) plus 9% compensation. 
  • If you are currently claiming 108.5% and still meet the qualifying conditions for the 2026/2027 tax year, you will need to update the parameter below:
  • Settings -> Miscellaneous -> Parameters, Parameters 1.

 

2.4 Parental Leave & Paternity Leave changes due to the ERA 2025

  • From 6 April 2026, changes introduced under the Employment Rights Act 2025 will alter eligibility rules for some parental leave. Paternity Leave becomes a Day 1 right, removing the previous 26-week (paternity) and 12-month (parental leave) service requirement. This change affects leave entitlement only, not statutory payment rules. Employers should note that while employees will be entitled to take time off from their first day of employment, any payment provided during this period remains at the employer’s discretion and cannot be reclaimed from HMRC; such payments must therefore be processed as occupational/company scheme payments, outside of statutory recovery and of RTI reporting.
  • In addition, the Act removes prior restrictions preventing parents from taking Paternity Leave or Statutory Paternity Pay after Shared Parental Leave. Payroll users should be aware that these updated rules change entitlement conditions only—the process for setting up SPP and ShPP payments in Payroll remains unchanged.

 

2.5 Statutory Sick Pay (SSP) changes

  • From 6 April 2026, significant updates to SSP take effect. The current three unpaid waiting days will be removed, meaning SSP will now be payable from the first day of absence. In addition, the link to the Lower Earnings Limit (LEL) will be removed, ensuring that all employees qualify for SSP regardless of their earnings level. SSP will move to a new calculation method under which employees will receive 80% of their Average Weekly Earnings (AWE) or the flat rate (£123.25 for 2026/27), whichever is lower.
  • Transitional protection rules will apply for employees who are already receiving SSP before 6 April 2026 and remain sick on or after that date. These rules safeguard employees earning between £125.00 and £154.05 per week, allowing them to continue receiving the updated flat rate of £123.25 for the remainder of their continuous sickness period—until they return to work, exhaust their 28week entitlement, their employment ends, or a pregnancy related exclusion period begins. The transition protection period will last no longer than 28 weeks – the latest date that this will apply to is 17 Oct 2026 – for an employee who commenced entitlement to SSP on 5th April (last day under old rules).
     

IMPORTANT PAYROLL INPUT REQUIREMENTS: 2.5.1 additional user instruction

When entering sickness periods spanning the April reform date:

  • Enter the sickness period up to 5 April as a single entry, ensuring you enter all calendar days, including non‑qualifying days such as weekends, unless there were gaps in sickness.
  • Enter the remaining sickness days from 6 April as a separate, new entry.
  • Important: The system will treat the sickness period as continued sickness only if there are no gaps in the sickness period AND the SSP payment is not zero.
  • If you need to override any automatically calculated fields or values, please remember to set the override value flag.

This process ensures correct application of both pre-reform and post-reform SSP rules, as well as the correct application of transitional protections.

 

2.6 Council Tax Attachment of Earnings Order (CTAEO) – Wales

We have introduced a new Council Tax Attachment of Earnings Order (CTAEO) – Wales wage type for use from the 2026/2027 tax year. This wage type must be configured according to the provided screen shot. If the suggested wage type code is already in use within your system, please select the next available code. To begin processing Council Tax Attachment of Earnings Order (CTAEO) – Wales deductions, create wage type 621002 – WCTAEO exactly as shown, ensuring that all values highlighted in the red fields are copied accurately. Once created, the wage type can be maintained on the employee record within the Fixed Wage Types section.

 

2.7 Student Loans Plan Type 5

  • We have added support for Student Loans Plan Type 5 from 2026/2027. Please confirm this has automatically been configured for your system by reviewing the Employee Enter/Adjust dialog costs/switches page. Plan Type 05 should be visible in the drop down for switch 12 in the switches grid, alongside the existing switches. It will be visible for all years but will only be valid to use for 2026/2027 onwards. If Plan Type 05 does not show on your system, please contact customer care.
  • Plan Type 05 is supported in all required areas including Data Provisioning Service (DPS) and RTI production.

 

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