The Budget Statement November 2025 and Sage software

Information on the Budget Statement and how it affects Sage 50 Payroll and Sage Payroll.

On Wednesday 26 November, the Chancellor of the Exchequer delivered the 2025 Budget Statement in the House of Commons.

Find out below about items as announced in the Budget that will affect payroll in your Sage software. The changes below take effect from 6 April 2026, the start of the 2026/27 tax year, unless stated otherwise.

We'll provide software updates and changes nearer the new tax year to ensure your software remains compliant.

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Income tax

The personal allowance threshold remains at £12,570 for the next tax year. This is the tax-free pay that employees receive via their tax code.

 TIP: £12,570 is the standard personal allowance, however employees' actual personal allowance depends on their circumstances and tax code. 

The Basic, Higher, and Additional Rate thresholds in England, Wales, and Northern Ireland will remain unchanged.

We'll publish the Scottish and Welsh income tax rates after their budgets in December/January. 

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National Insurance (NI)

The Lower Earnings Limit (LEL) increases to £6,708 (£129 per week). Other NI thresholds are unchanged, and are frozen at the 2025/26 levels until the end of the 2030/31 tax year.

NI contribution rate percentages for employees and employers remain the same as the 2025/26 rates.

Employer NI relief for veterans is extended until the end of 2027/28.

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National Minimum Wage

The following hourly rates take effect from 1 April 2026.

Category/age	Hourly rate
21 and above	£12.71
18-20	£10.85
16-17	£8.00
Apprentices	£8.00

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Employment allowance

The Employment Allowance is unchanged at £10,500 for the tax year.

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Statutory payments

Statutory payment rates in the new tax year are as follows:

Payment type	Weekly payment amount
Statutory Sick Pay	£123.25
Statutory Maternity Pay	£194.32
Statutory Paternity Pay	£194.32
Statutory Adoption Pay	£194.32
Shared Parental Pay	£194.32
Statutory Neonatal Pay	£194.32
Statutory Parental Bereavement Pay	£194.32

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Salary sacrifice

For employees on a salary sacrifice pension scheme, their total pension contributions are currently Income Tax and NI-free.

From April 2029, only the first £2,000 per year will be free from employee and employer NI contributions.

 TIP: Pension contributions will still be exempt from Income Tax, subject to existing limits. To find out more, go to Gov.UK. 

Employee salary sacrifice car ownership schemes were due to fall under the Benefit in Kind rules from April 2026. This has been deferred to April 2030.

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Student/Postgraduate Loans

The Plan type 2 threshold is frozen from 2027/28 until 2029/30.

See the table below for the thresholds that are applicable from April 2026.

Plan type	Payment thresholds
Plan type 1	£26,900
Plan type 2	£29,385
Plan type 4	£33,795
Plan type 5	£25,000
Postgraduate	£21,000

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