Mar 20

Spring payroll updates: A quick guide for employers

From April 6th 2026, the pension age will increase from 66 years to 67 years. This is an important consideration for employers, as employee Class 1 National Insurance contributions are no longer payable once an individual reaches State Pension age.

State Pension Age Changes

The State Pension age will begin to rise from 66 to 67 from 6 April 2026, with the increase introduced gradually. This is an important change for employers to be aware of, as employee Class 1 National Insurance contributions are no longer payable once an individual reaches State Pension age.

Who is affected?

Men and women born between 6 April 1960 and 5 March 1961 will reach State Pension age at 66, plus a set number of additional months.

For example:

  • Someone born on 5 May 1960 will reach State Pension age on 5 June 2026

  • Someone born on 6 May 1960 will reach State Pension age on 6 July 2026

Anyone born on or after 6 March 1961 will have a State Pension age of 67.

Class 1 NICs

Although employee class 1 NICs are no longer payable once an employee reaches SPA, employer contributions are still due:

  • For employees, the change applies to the first wage or salary payment on or after SPA is reached. NIC classification is based on the date of payment, not the earnings period.
  • For example, NIC category letter C will be used for the whole of the June 2026 salary (paid at month end) for any employee who has reached SPA on or before 30 June 2026.
  • Employers should check that the employee’s NI category letter has been set to ‘C’ in payroll software so that no further employee class 1 NICs are deducted. The software may do this automatically based on the employee’s date of birth.

The normal procedure is for the employee to show proof of reaching SPA, either with their birth certificate or passport.

For the self-employed, the NICs situation on reaching SPA is more straightforward. They simply stop paying class 4 NICs from the start of the tax year after reaching SPA.

SPA can be checked using the government’s check your SPA calculator, which can be found here.