If you run a business, work as a contractor, or manage a workforce, April 2026 is a crucial date to remember. Significant updates are upcoming in employment law, payroll regulations, and contractor rules.
This guide aims to assist in understanding forthcoming changes and their practical implications. It emphasises the most critical points and actions to consider to remain prepared.
1. The Employment Rights Act 2025: What Is Changing?
The Employment Rights Act 2025 received Royal Assent in December 2025 and signifies one of the most consequential amendments to the employment legislation in recent years. Although it has now been enacted, the majority of the changes will be introduced gradually from April 2026 through 2027. The following outlines the primary modifications for your preparation.
Statutory Sick Pay Is Changing
Effective from 6 April 2026, the regulations concerning Statutory Sick Pay will be amended. Previously, employees were required to wait 3 days before becoming eligible for sick pay; however, this waiting period will be abolished, and SSP will be payable from the first day of illness. Furthermore, the Lower Earnings Limit will be eliminated, enabling more workers to qualify for SSP.
Additionally, the SSP calculation method will also be revised: employees will receive either 80% of their regular earnings or the standard SSP rate, whichever is lower. Employers are advised to update their payroll systems accordingly and conduct early testing to ensure the smooth processing of staff sick pay claims. For official guidance on SSP rates and eligibility, visit the UK Government’s Statutory Sick Pay page.
Day One Rights for Parents
Starting April 2026, paternity leave and unpaid parental leave will be accessible from the first day of employment. Employees will no longer need to fulfil a specific period of employment prior to being eligible to apply for these benefits.
Read our full blog for a detailed breakdown: The Employment Rights Bill: What Employers Need to Know
2. Umbrella Companies: New Liability Rules
This change impacts companies using umbrella companies. Starting on 6 April 2026, new shared responsibility rules will apply to PAYE and National Insurance. If an umbrella company fails to pay the correct taxes, HMRC will not only pursue the umbrella company, but may also take action against the recruitment agency or end client.
HMRC has made it clear that businesses must verify their supply chains. It is essential to review your providers, request proof of compliance, seek FCSA accreditation, and document your checks. This proactive approach will help protect you in case any issues arise in the future.
Read our full blog for a detailed breakdown: Tackling non-compliance in Umbrella market – Understand the upcoming changes in 2026
3. Payrolling Benefits in Kind: Extra Time Given
Good news regarding benefits in kind: HMRC has deferred the payroll reporting obligation from April 2026 to April 2027. This extension grants an extra year for preparations. Use this period to review your systems and plan any requisite adjustments. Refrain from delaying until the last moment.
Read our full blog for a detailed breakdown: Mandatory Payrolling of Benefits in Kind and Expenses: How the 2027 HMRC Payrolling Reform Will Affect Employers
4. IR35: Revised Small Company Criteria and SDS Obligations
Changes to IR35 regulations will take effect from 6 April 2026, as the criteria for defining a small company are being widened. Previously, a business qualified as small if it met two of these conditions: a turnover of £10.2 million or less, a balance sheet total of £5.1 million or less, or 50 or fewer employees.
The new thresholds are higher, with turnover increasing to £15 million and the balance sheet total to £7.5 million, while the employee limit remains at 50. This change means more companies will now fall within the “small company” definition.
Where a client qualifies as a small company, the off-payroll working rules do not apply to the client, and responsibility for IR35 compliance shifts back to the contractor operating through their Personal Service Company (PSC). For comprehensive information about IR35 and off-payroll working rules, refer to HMRC’s official IR35 guidance.
Contractors should verify if their clients now qualify as small companies, and businesses should review whether they still need to issue Status Determination Statements.
Read our full blog for more details: Navigating IR35: How to Ensure Your Business Stays Compliant
5. Construction Industry Scheme: Stronger Action Against Fraud
From 6 April 2026, HMRC will have enhanced enforcement powers to tackle fraud under the Construction Industry Scheme (CIS).
Under the new measures, HMRC will:
- Remove Gross Payment Status immediately if a business knew, or should have known, about tax fraud.
- Charge tax losses directly to the business and apply penalties of up to 30%.
- If GPS is removed, the business will be unable to reapply for five years instead of one year.
The changes significantly increase the compliance risk for contractors and place greater responsibility on businesses to monitor their supply chains.
Read our full blog for more details: How Gross Payment Status Works in the Construction Industry Scheme
What Should You Do Now?
April 2026 is approaching. Here is an outline of the required actions at this time:
- Review employment contracts and HR policies to ensure that updates related to sick pay and parental leave are accurately documented.
- Assess your supply chain, especially if working with umbrella companies or in the construction sector, to ensure all partners comply with regulations, as mistakes on their part could become your liability.
- Examine your IR35 status, as recent thresholds might shift the responsibility for IR35 assessments.
- Scrutinise your payroll systems, since changes to SSP require precise calculations. Perform thorough testing of your systems well before April 2026.
How The Infinity Group Can Help
Managing regulatory changes while running a business can be challenging. Employment and payroll regulations frequently evolve, making it easy to overlook critical updates.
At The Infinity Group, compliance is fundamental to our operations. Our CIS payroll and umbrella solutions are meticulously designed with compliance at their core, helping you adhere to HMRC standards while minimising risks across your workforce and supply chain. We proactively identify potential issues, implement comprehensive verification procedures, and ensure that payments and deductions are accurate and transparent.