Ahead of the Autumn Budget, an increase to the National Minimum Wage (NMW) and National Living Wage (NLW) was to be expected, but few were prepared for how much it would increase.
For businesses already struggling under the pressure of operational costs, there is a great concern that payroll is about to become more complicated.
If you seek to support businesses in these challenging times, it is worth understanding the pressures they face and how technology could alleviate some of the burden.
How will rising wages make payroll more complex?
While an increase in the NLW would not, in isolation, add more complexity to payroll, the sharp jump might set off a domino effect that will impact various payroll processes.
From April 2026, the increase in employee wages includes:
- National Living Wage (for 21 and over) – £12.71 per hour (up 4.1 per cent)
- National Minimum Wage for 18-20 year olds – £10.85 (up 8.5 per cent)
- National Minimum Wage for 16-17 year olds and apprentices – £8.00 per hour (up 6 per cent)
Those who are sharp with numbers may have already calculated that a full-time worker on NLW is set to earn an annual salary of £26,436.80.
This means that, for the first time, over half of an NLW wage will be over the Personal Allowance threshold, meaning a larger Income Tax burden for all workers.
You may have also noted that a sizeable annual salary and begun to wonder how it might impact other wages.
It is expected that business owners will soon face pressure from other employees to get sizeable pay increases in order to maintain a sense of wage fairness within the workplace.
When this happens, it is likely that some workers may find themselves over the Higher Rate threshold, where they will be subject to paying even more Income Tax.
For graduate employees, the rising wages are likely to mean more people face student loan repayments than was previously anticipated.
Currently, the income thresholds for each plan type are as follows:
| Plan type | Yearly income threshold | Monthly income threshold | Weekly income threshold |
| Plan 1 | £26,065 | £2,172 | £501 |
| Plan 2 | £28,470 | £2,372 | £547 |
| Plan 4 | £32,745 | £2,728 | £629 |
| Plan 5 | £25,000 | £2,083 | £480 |
| Postgraduate Loan | £21,000 | £1,750 | £403 |
While graduates on Plan 5 were set to face repayments on NLW, the sharp increase now puts Plan 1 graduates on the hook as well.
These changes to wages could see employers who have little to no experience of handling student loan payments or higher-rate Income Tax payments suddenly needing to manage them.
How can you help businesses stay compliant with payroll?
The last thing that struggling businesses need right now is additional complications.
This is where accounting teams can step in to change the narrative and provide business owners with the much-needed support that the Government failed to provide.
To better enable this, business owners are going to need simple systems that are capable of keeping pace with even the most complex payroll requirements.
Glasscubes is designed to make the new payrolling obligations achievable by offering unparalleled support for gathering client payroll information.
Rather than having to keep following up with business owners manually, you can relax knowing that Glasscubes will send out automated reminders so that deadlines are not missed.
All information is stored in one secure workflow, so you do not need to scroll through inboxes to find what you need to get the work done.
By taking out the tedium from the work, you can be ready to support business owners whatever challenges arise in the next year.
Book a demo today to find out how Glasscubes can help you support business owners with their payroll compliance needs.
