Payroll Updates for 2026 - What Employers Need to Know

As your trusted payroll adviser, Offshore Commercial has prepared a summary of the key payroll changes for 2026, broken down by jurisdiction. The updates below highlight what we consider to be the most important changes. This is not an exhaustive list, and we recommend seeking advice if you are unsure how any of these updates apply to your business.

If you would like to discuss any of the upcoming changes, please contact our payroll team at payroll@offshoregroup.gg.

Payroll Updates - Guernsey

The start of Q1 2026 marks the start of a new tax year in Guernsey, bringing several changes that employers should be aware of.

Secondary Pensions

From 1 January 2026, employees must contribute at least 1.5% of their earnings to their secondary pension.

• Employers who are already contributing above the minimum do not need to take any action.

  
  

• Employers who have not yet selected a pension provider are now at risk of fines from Guernsey Revenue for non-compliance.

  
  

New Social Insurance Thresholds

The following updated SI rates and limits now apply:

• Employee contribution: 7.5% (7.4% last year)

  
  

• Employer contribution: 7.10% (7.0% last year)

  
  

• Lower earnings limit: £832 per month (£797.33 last year)

  
  

• Upper earnings limit: £16,380 per month (£15,717 last year)

Tax Coding Updates

New tax codes have been issued by the Guernsey Revenue Service.

• If an employer or employee is missing the revised tax code, payroll must apply a zero-tax allowance, resulting in a 20% deduction.

  
  

• We recommend completing the online tax coding form as soon as possible:https://gov.gg/updatecoding

Payroll Updates - Jersey

The 2026 tax year also brings several payroll updates in Jersey.

New Social Insurance Thresholds

Updated SI rates and earnings limits are as follows:

• Employee contribution: 6.00% (unchanged)

  
  

• Employer contribution: 6.50% (unchanged)

  
  

• Lower earnings limit: £618 per month (£553 last year)

  
  

• Standard earnings limit: £6,062 per month (£5,800 last year)

  
  

• Upper earnings limit: £27,632 per month (£26,442 last year)

  
  

Tax Allowances

New tax allowance percentages have been issued by the Jersey Tax Office.

• Where the updated percentage is missing, payroll must apply a zero-tax allowance, resulting in a 22% deduction.

  
  

• Standard exemption threshold: £21,250 (£20,700 last year)

Introduction of Independent Taxation

From 2026, Jersey will introduce mandatory independent taxation for all residents, replacing the current married couple regime. 2026 is the first year that independent taxation is mandatory.

This means:

• Each partner must submit their own tax return

  
  

• Each individual will be assessed on their own income, with their own personal allowance and deductions. 

Updates to Minimum Wage from 1 April 2026

From 1 April 2026, the main minimum wage will be £13.59 per hour, with a Year 1 trainee rate of £10.50 per hour for trainees starting on or after 1 September 2025.

Maximum weekly offsets are:

• Accommodation only: £152.60 (main rate) / £117.95 (trainee rate)

• Accommodation and food: £203.35 (main rate) / £157.15 (trainee rate)

Employees qualify for the minimum wage once they reach statutory school leaving age, which is 30 June in the year they complete Year 11.

From this date, employers must also deduct and pay social security contributions.

Employees below school leaving age are paid at the employer’s discretion, and no social security contributions should be deducted.

Payroll Updates - UK

As the UK tax year approaches its final quarter, the main focus is on payrolling benefits in kind (BiKs).

Mandatory Payrolling of Benefits - Delayed

The government has confirmed that mandatory payrolling of BiKs and taxable employment expenses will now be introduced from April 2027, giving employers additional preparation time.

From April 2027:

• Employers may voluntarily payroll employment-related loans and accommodation

  
  

• Some less common benefits (such as tax award schemes and third-party benefits) are excluded for now, with further guidance expected later in the year

  
  

Reporting through FPS

From April 2027, BiKs and expenses will be reported via the Full Payment Submission (FPS) process.

• FPS will be used to report the taxable value of benefits and expenses in real time

  
  

• Both Income Tax and Class 1A NICs will be calculated and reported each pay period

  
  

How BiKs will be Calculated

• The annual cash equivalent of a BiK will be divided by the number of relevant pay periods

  
  

• Each pay-period amount will be taxed in the same way as earnings

  
  

• Class 1A NICs will also be calculated per pay period

  
  

If the BiK value is unknown at the start of the year, employers must estimate the value and adjust later if required. 

Where a benefit is identified partway through the year, it can be reported across the remaining pay periods without amending earlier submissions.

Penalty Protection During Transition

To support the transition:

• Employers will not be penalised for inaccuracies relating to mandatory payrolling during the 2027–2028 tax year, unless there is evidence of deliberate non-compliance

Tax Deduction Limits

• Employers must not deduct more than 50% of an employee’s pay in tax in any pay period

  
  

• Any excess must be carried forward

  
  

• Uncollected amounts will be recovered by HMRC after year-end via the P800 or Simple Assessment process

  
  

These rules also apply where employees receive reduced income, such as statutory payments. Where an employee or director receives no income, employers must still report BiKs via FPS and pay the associated Class 1A NICs.

Payroll Updates - Isle of Man

Due to the stable nature of the Isle of Man payroll, there are no key changes at this time. Further updates will be provided in Q2 2026, ahead of the new Isle of Man tax year starting in April 2026.

Need support?

Payroll legislation continues to evolve across all jurisdictions, and keeping up to date is essential to remain compliant.

If you would like support with any of the changes outlined above, or to review your payroll processes ahead of the new tax year, please contact our payroll team at payroll@offshoregroup.gg.