Academy Training Payroll Pulse – February/March 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 – February/March 2026 Edition

Spring is coming… and so is the new tax year!

March is that strange in-between month in payroll. One eye on the current tax year, one eye firmly on 6 April. Systems are being updated, rates are being checked (twice!), and everyone is asking:

“Are we ready?”

Let’s dive into what’s new, what’s changing, and what payroll professionals need on their radar as we head towards 2026/27.

Advisory Fuel Rates – Updated from 1 March 2026
HMRC has released the new Advisory Fuel Rates (AFRs) effective from 1 March 2026. Remember, you can continue using the previous rates for up to one month after the new rates apply.

Petrol & LPG

Engine Size Petrol LPG
1400cc or less 12p 10p

1401cc – 2000c 14p 12p

Over 2000cc 22p 19p

(Hybrid cars are treated as petrol or diesel.)

Diesel

Engine Size Rate

1600cc or less 12p

1601cc – 2000cc 13p

Over 2000cc 18p

Electric Cars (Now Split!)

Charging Location Rate

Home charger 7p

Public charger 15p

Yes — the electric advisory rate now depends on where the vehicle is charged. These rates will continue to be reviewed quarterly.

Inflation Falls to 3%

The Office for National Statistics (ONS) has confirmed inflation has fallen to 3%, driven largely by transport and food prices easing.

The next CPI update lands on 26 March 2026, just ahead of the next Bank Rate decision.
Economists predict further falls — and possibly further interest rate cuts later this year.

Bank Rate Held at 3.75%
The Bank of England’s Monetary Policy Committee (MPC) voted to maintain the base rate at 3.75%.

• 5 members voted to hold
• 4 voted for a 0.25% cut

The next announcement is due 19 March 2026.

Why payroll should care:
HMRC interest rates are linked to base rate:

• Late payment interest = Base rate + 2.5%
• Repayment interest = Base rate – 1% (minimum 0.5%)

Timely PAYE payments remain crucial — interest is still costly.

Big Coding Notice: Employment Expenses & Gift Aid Adjustments
HMRC has confirmed that from April 2026, they will remove:
• Certain Employment Expenses
• Higher Rate Gift Aid Relief

…from selected tax codes where:
• There’s no recent Self-Assessment footprint
• The claim appears outdated
• There has been no recent confirmation

Employees who remain entitled must reapply through normal channels.

Expect tax code queries in April!

Agent Services Accounts – Payroll Only Providers
From 18 November 2026, payroll-only service providers must register for an Agent Services Account (ASA).

You can register from 18 May 2026 and must register by 18 February 2027.

Important: Registration requires supervision by an Anti-Money Laundering (AML) Supervisor.

AML oversight is moving centrally to the Financial Conduct Authority (FCA), meaning professional bodies will not supervise independently moving forward.

Employment Rights Act 2025 – New Support Hub
Following the passing of the Employment Rights Act 2025, the Department for Business and Trade has launched a new guidance hub:
www.business.gov.uk/employment-changes

The site includes:
• Timelines
• Day 1 rights guidance
• SSP changes (including removal of the LEL trigger)
• Zero-hours reforms
• Unfair dismissal changes
• Tribunal reforms
• Bereavement leave expansion

There are over 25 impact assessments published. This is essential reading ahead of April implementation phases.

Small Employers’ Relief – Boosted to 9%
Good news for smaller employers.

From 2026/27:
• Employers who paid less than £45,000 in Class 1 NICs (last tax year)
• Can reclaim 100% of statutory payments plus 9% compensation

This applies to:
• SMP

• SPP
• SAP
• ShPP
• Parental Bereavement Pay
• Neonatal Care Pay

The £45,000 threshold remains unchanged.

Updated Starter Checklist (April 2026)
HMRC has issued a revised Starter Checklist including:
• Student Loan Plan 5
• Clearer guidance to select only one plan type
• Instructions for employers if multiple plans are selected

The online version will prevent multiple selections (except Postgraduate Loans).

Scottish Budget – New Tax Bands for 2026/27
Scotland has announced:
• 7.4% increases to Basic and Intermediate thresholds
• All other rates frozen

Scottish tax bands from April 2026:

Rate Income Range Rate
Starter £12,571 – £16,537 19%
Basic £16,538 – £29,526 20%
Intermediate £29,527 – £43,662 21%
Higher £43,663 – £75,000 42%
Advanced £75,001 – £125,140 45%
Top Over £125,140 48%
Scottish payroll professionals — system updates are essential before 6 April.

P11D Working Sheets Updated
HMRC has published final P11D working sheets for 2025/26.

While aimed at software developers, they are extremely useful references for payroll professionals preparing for benefits reporting season.

Riddle Time!
Last Month’s Riddle:
“I change every April… I tell them to dance…”

Answer:

Statutory payment rates (updating’s each April)

March Riddle:
“I’m new in a year but old in a flash,

I travel through payroll and live in the cash.
I tell the tax story of what’s yet to pay —
Ignore me at year end? You’ll regret it in May.
What am I?”

(Answer revealed in April’s Payroll Pulse!)

Final Thoughts
March is preparation month. It’s system-update season. It’s “double-check your tax tables” time.

With fuel rate changes, coding adjustments, Scottish tax reforms, and Employment Rights implementation gathering pace — 2026 is shaping up to be another transformative year for payroll.

But as always, payroll professionals are ready.

Accurate. Adaptable. And armed with spreadsheets.

See you in April — and happy new tax year preparation!

From all of us at Academy Training.