From tax year 2026/26, employers will now need to submit RTI returns if any of their employees earn above the Secondary Threshold.

The Income Tax (Pay As You Earn) Regulations 2003 is the main Income Tax administration legislation and covers the assessment, charge, collection, recovery and RTI reporting obligations.  The legislation applies when a payment is made that is at or above the Lower Earnings Limit (LEL) for National Insurance Contributions (NICs).  So, for example, when a payment is made that is above the LEL, the employer is required to obtain the P45 / Starter Checklist, complete a payroll record and return the information to HMRC via the Full Payment Submission (FPS).

The October 2024 UK Budget made changes to the Secondary Threshold (ST), reducing the value from £9,100 a year to £5,000 per year.  An implication of this, as outlined in HMRC’s Policy Paper ‘Changes to the Class 1 National Insurance Contributions Secondary Threshold, the Secondary Class 1 National Insurance contributions rate, and the Employment Allowance from 6 April 2025’ is that from 2025/26, the 2003 Regulations will apply to those who earn at or above the Secondary Threshold.  However, there was no legislative backing to this announcement,

The Income Tax (Pay As You Earn) (Amendment) Regulations 2025 provide the legislative backing.  What these details is that from 06 April 2025, an employer is required to comply with the 2003 Regulations (and RTI filing obligations) where an employee has earnings at the LEL or ST, whichever is the lower.

For Bookkeepers

The HMRC Policy Paper is clear that this will affect employers, particularly those who have not had to complete payroll processing because all employees were earning below the LEL.  From tax year 2026/26, employers will now need to submit RTI returns if any of their employees earn above the ST.  On a per-pay-period basis, ICB outlines the LEL and ST values for both tax year 2024/25 and 2025/26 so that you can see if there will be any impacts for the client payrolls you process:

Payroll software should be able to identify employees that may not have been reported and ensure they are reported in 2025/26.  This is providing they are within the payroll software in the first place.  So, bookkeepers need to be aware that payroll processing (data gathering, input and reporting) may now apply to more employees than before.