Academy Training Payroll Pulse – August Edition

Welcome to Payroll Pulse, the only blog where payslips come alive, and payroll teams get their moment in the spotlight!

Academy Training Payroll Pulse – August 2026 Edition

Payroll in Focus: Big Changes, Future Planning and a Few Surprises!
Welcome to the August edition of the Academy Training Payroll Blog.

Whilst many people are making the most of the summer holidays, the world of payroll certainly hasn’t slowed down! August has brought a mixture of consultations, legislative developments, pension updates, payroll reporting changes and plenty of announcements that payroll professionals should keep firmly on their radar over the coming months.
Whether you’re processing payroll, managing HR, supporting apprentices or simply enjoy keeping up to date with payroll legislation (we know you’re out there!), we’ve rounded up everything you need to know.
So grab a cuppa, settle in, and let’s dive into this month’s biggest payroll stories.

Employment Rights Continue to Evolve
One of the Government’s biggest employment reform programmes continues to gather pace under its Plan to Make Work Pay initiative.

Zero-hour contracts under consultation
The Department for Business and Trade has opened a consultation looking at how new rights surrounding zero-hour contracts should operate in practice.

Importantly, this is not a ban on zero-hour contracts.

Instead, the Government wants to tackle situations where workers experience unpredictable hours and uncertain income whilst still allowing employers enough flexibility to deal with seasonal demand.

Current proposals include introducing:
• a right to guaranteed hours based upon hours regularly worked
• reasonable notice of shifts
• compensation where shifts are cancelled, shortened or moved at short notice.

The consultation remains open until 25 August 2026, giving employers, workers and payroll professionals an opportunity to share their views before the legislation is finalised.

Support for unpaid carers could be strengthened
Another consultation focuses on improving employment rights for unpaid carers and parents of seriously ill children.

With millions of people balancing work alongside caring responsibilities, the Government is considering introducing paid carer’s leave for the first time, alongside stronger protections allowing carers to return to work after extended periods away.

If introduced, these proposals could significantly affect workplace policies, absence management and payroll processing in future years.

The consultation closes on 1 September 2026.

Salary transparency could transform recruitment
One of the most talked-about consultations this month concerns pay transparency.

The Government is considering making it mandatory for employers to publish salary information within job adverts or provide salary details before interview where vacancies are not publicly advertised.

The proposals aim to:

• reduce pay inequality

• improve recruitment transparency

• strengthen equal pay protections

• make salary expectations clearer before candidates apply.

Should these proposals become law, recruitment practices across the UK may look very different over the next few years.

Benefits in Kind: The Road to Mandatory Payrolling
One of the biggest payroll changes arriving in the next few years continues to develop.

HMRC has now confirmed a phased approach to mandatory payrolling of Benefits in Kind.

Rather than introducing every benefit at once, Phase 1 (from April 2027) will initially include:
• Company cars
• Company car fuel
• Vans
• Van fuel
• Private medical insurance.

Other benefits will continue through P11D reporting or voluntary payrolling before gradually becoming mandatory from April 2028, with accommodation and beneficial loans following later.

This staged approach gives payroll software providers and employers additional preparation time whilst still moving towards real-time taxation of employee benefits.

If your organisation already payrolls benefits voluntarily, there is no need to stop—you can continue using your existing arrangements.

HMRC Updates You Shouldn’t Miss
Making Tax Digital reaches another milestone
For sole traders and landlords now operating under Making Tax Digital for Income Tax, the first quarterly submission deadline arrives on 7 August 2026.

Remember that each quarterly submission updates your tax position for the year to date, meaning corrections to earlier records can simply be included within your latest submission rather than resubmitting previous returns.

Digital record keeping is now becoming an everyday part of tax administration, making accuracy more important than ever.

Multi-Factor Authentication is on its way
HMRC continues strengthening security for tax agents.

Agents who opted into the second early activation period will begin using Multi-Factor Authentication from 19 August 2026.

For everyone else, HMRC will automatically activate MFA between late September and mid-October.

Whilst entering an additional security code may add a few extra seconds to your login, it’s a welcome step towards protecting sensitive client information.

Low earner pension payments begin
Throughout August, HMRC will begin contacting around one million individuals regarding low earner pension payments.

This addresses the long-standing issue affecting employees contributing to workplace pensions through net pay arrangements, where some lower earners previously missed out on pension tax relief.

The important message for employers is simple: there is nothing you need to do.

HMRC will contact eligible individuals directly either through their Personal Tax Account or by post.

Employees should also remember that genuine HMRC messages will never ask for passwords, PIN numbers or bank transfers.

Pensions Continue to Make Headlines
Pensions remain one of payroll’s busiest topics this year.

Pension death benefits and Inheritance Tax
HMRC has released further technical guidance ahead of significant changes taking effect from 6 April 2027.

Unused pension funds and certain pension death benefits will become subject to Inheritance Tax as part of an individual’s estate.

Whilst this will primarily affect estate planning rather than payroll operations, employers with pension expertise may receive more employee questions as awareness grows.

State Pension National Insurance issue
HMRC has also confirmed that approximately 800,000 self-employed individuals who started working for themselves between 2015 and 2024 may have gaps in their National Insurance record.

The issue arose where individuals registered for Self-Assessment but did not separately complete the required CWF1 notification.

The good news?

Nobody needs to take immediate action.

HMRC will contact affected individuals directly over the coming months and years, with opportunities to fill historic National Insurance gaps where appropriate.

Fair Work Agency Begins Taking Shape
The newly created Fair Work Agency (FWA) is beginning to establish how it will operate.
Its role will be to bring together employment rights enforcement into a single organisation covering areas such as labour market enforcement, vulnerable workers, recruitment agencies and eventually National Minimum Wage compliance.

HMRC will continue enforcing National Minimum Wage during 2026/27 before responsibilities transfer to the Fair Work Agency in April 2027.

For employers, this should eventually provide one clearer point of contact for employment rights advice and enforcement.

Gender Pay Gap Reporting Guidance Updated
Following last year’s Supreme Court ruling, the Government has updated its Gender Pay Gap reporting guidance.

Employers within scope are now expected to use biological sex when preparing Gender Pay Gap reports.

For many organisations this could require reviewing how employee data is collected, stored and governed, particularly where payroll and HR systems currently hold different information.

Although reporting requirements themselves have not changed, organisations may need to review their internal processes well before their next reporting deadline.

Inflation Watch
The latest figures from the Office for National Statistics show inflation has eased slightly.
Consumer Prices Index (CPI) inflation fell from 2.8% to 2.6% during June.

Whilst this is encouraging news, payroll professionals continue monitoring inflation closely because September’s CPI figure often influences future statutory payment increases.

The next inflation announcement is expected on 19 August 2026.

Looking Ahead
There are several important dates worth keeping in your diary.

Throughout August, HMRC will begin issuing low earner pension payment notifications, while the first Making Tax Digital quarterly filing deadline arrives on 7 August. The second early rollout of Multi-Factor Authentication for HMRC agent accounts begins on 19 August, and the consultation on zero-hour contract reforms closes on 25 August. Looking a little further ahead, the consultation on support for unpaid carers closes on 1 September, stakeholder submissions for the Autumn Budget close on 9 September, and the Chancellor has confirmed that the Autumn Budget will take place on 28 October 2026.

As always, payroll professionals should continue keeping one eye on today’s legislation and the other firmly on tomorrow’s developments!

Last Month’s Payroll Riddle… Answer!
July’s riddle asked:
“I travel with employees wherever they go, yet I never leave the payroll office. I help decide tax, pension and National Insurance, but I am not a person. What am I?”

Answer: A payroll record (or payroll file)!
Without accurate payroll records, calculating pay, tax, pensions and statutory deductions would be almost impossible.

Well done if you guessed correctly!

August Payroll Riddle
I can reduce your tax without reducing your pay. I often appear alongside pensions, childcare or electric cars. Employers like me, employees benefit from me, and HMRC has rules about me. What am I?

Think you know the answer?

We’ll reveal it in next month’s Academy Training Payroll Blog!

Thank you for reading this month’s roundup.

Payroll never stands still, and neither do we. Whether it’s legislative updates, payroll best practice, apprenticeship news or practical tips to help you stay compliant, Academy Training is here to keep you informed every step of the way.

Have a fantastic August, and we’ll see you next month for another edition packed with the latest payroll news, guidance and insights!

From all of us at Academy Training.