Why Your May 2026 Payslip Looks Different: NLW, Employer NI, Student Loans and Scottish Tax
May 2026 is the second payslip of the 2026/27 tax year — and it may look very different from last April. NLW rose to £12.71, employer NI hit 15%, student loan thresholds changed. Here's what every pay change means.
Why May matters as a payslip check point
April is technically when tax year changes take effect, but many payroll teams run April on the old year's parameters and the first "clean" 2026/27 payslip arrives in May. Whether you were paid in April or May under the new rates, now is the right moment to cross-check your payslip against what you should be receiving.
This guide walks through every significant change affecting UK employees from 6 April 2026.
Change 1: National Living Wage rose to £12.71/hour
The National Living Wage (NLW) for workers aged 21 and over increased from £12.21 to £12.71/hour on 1 April 2026 — a 50p (4.1%) rise.
Other rates from 1 April 2026:
- 18–20 year olds: £10.85/hour (up from £10.00)
- Under 18 / Apprentice: £8.00/hour (up from £7.55)
What it means on a payslip
For a 37.5-hour/week NLW worker:
| 2025/26 | 2026/27 | Change | |
|---|---|---|---|
| Gross annual | £23,810 | £24,784 | +£974 |
| Income tax | £2,248 | £2,443 | +£195 |
| Employee NI | £899 | £977 | +£78 |
| Net annual | £20,663 | £21,364 | +£701 |
The £974 gross rise delivers £701 net — the £273 difference goes to HMRC as additional income tax and NI on the extra earnings above the frozen thresholds.
Who should check their payslip: Any worker who was on £12.21/hour should now see at least £12.71/hour on their payslip. If you haven't seen the rise, contact HR or payroll immediately — employers can face fines from HMRC for NMW underpayment.
Take-Home Pay Calculator
Calculate your net salary after income tax, National Insurance and student loan deductions.
Check your new take-home pay for 2026/27Change 2: Employer NI — why this affects you too
Employers now pay 15% National Insurance on employee earnings above the secondary threshold of £5,000/year (down from £9,100 previously). This is an employer cost — it doesn't appear on your payslip — but it has knock-on effects:
- Pay reviews: Employers facing a higher NI bill on every pay rise may offer smaller increases, particularly in sectors with large low-wage workforces.
- Salary sacrifice: The employer NI saving on salary sacrifice schemes (pension, cycle to work, EVs) is now larger — employers save 15p for every £1 of gross pay sacrificed (up from 13.8p). Many employers pass some of this saving back to employees. Check if your employer has updated their salary sacrifice terms.
- Hiring decisions: The ONS Wages and Employment surveys for Q2 2026 will show whether the higher employer NI has moderated hiring — relevant context if your pay review is being negotiated.
The change does not affect employee NI rates. You still pay 8% on earnings between £12,570 and £50,270, and 2% above £50,270.
Change 3: Student loan thresholds (April 2026)
Student loan repayments are deducted by payroll like tax — and the thresholds that trigger deductions changed on 6 April 2026.
| Plan | 2025/26 threshold | 2026/27 threshold | Monthly trigger |
|---|---|---|---|
| Plan 1 (pre-Sep 2012) | £24,990 | £26,065 | £2,172/mo |
| Plan 2 (post-Sep 2012 England/Wales) | £28,470 | £29,385 | £2,449/mo |
| Plan 4 (Scotland) | £32,745 | £33,795 | £2,816/mo |
| Plan 5 (post-Aug 2023 England/Wales) | £25,000 | £25,000 | £2,083/mo |
| Postgraduate Loan | £21,000 | £21,000 | £1,750/mo |
Repayment rate is 9% of earnings above the threshold for Plans 1, 2, 4, and 5. Postgraduate Loan is 6%.
Who this affects
- If you're on Plan 2 earning just above the old threshold (e.g. £28,800): from April 2026, deductions only apply to earnings above £29,385. So the first £915 of salary above £28,470 is now below the threshold — you pay 9% less on that band, saving roughly £82/year.
- If you're on Plan 4 (Scotland) earning near the threshold: the same logic applies — higher threshold = lower deduction for those near the boundary.
Check your payslip: your student loan deduction line (labelled "SL" or "Student Loan Plan X") should reflect the new threshold from your April or May payslip.
Change 4: Scottish income tax bands 2026/27
Scottish taxpayers pay income tax at Scottish rates set by the Scottish Parliament, not HMRC's UK-wide rates. For 2026/27:
| Band | Rate | Income range |
|---|---|---|
| Personal Allowance | 0% | Up to £12,570 |
| Starter rate | 19% | £12,571 – £16,537 |
| Scottish Basic rate | 20% | £16,538 – £29,526 |
| Intermediate rate | 21% | £29,527 – £43,662 |
| Higher rate | 42% | £43,663 – £75,000 |
| Advanced rate | 45% | £75,001 – £125,140 |
| Top rate | 48% | Above £125,140 |
Compare to rest of UK (England, Wales, NI):
- Basic: 20% to £50,270
- Higher: 40% above £50,270
Key differences for Scottish taxpayers:
A Scottish employee on £35,000 pays roughly £400 more income tax per year than an equivalent employee in England. A Scottish employee on £75,000 pays significantly more due to the 42% rate kicking in at £43,662 vs £50,270 in England.
Scottish tax codes start with "S" (e.g. S1257L). If you live in Scotland but your payslip shows a non-S code, contact HMRC — you may be on the wrong tax bands.
Change 5: Tax code — is yours correct?
The most common cause of over- or under-payment of tax is a wrong tax code. For 2026/27, the standard code for most employees with one job is:
1257L
This represents the £12,570 personal allowance (the "L" means standard allowance). If your code is different, here's what it might mean:
| Code | Meaning | Action |
|---|---|---|
| 1257L | Standard — correct for most | No action needed |
| BR | Basic rate on all income — no personal allowance | Check with HMRC — you may be paying too much |
| 0T | Zero personal allowance — emergency tax or second job | Urgent: contact HMRC or provide a P45 to new employer |
| D0 | All income taxed at 40% | Second job / multiple income sources — may or may not be correct |
| D1 | All income taxed at 45% | As above but top rate |
| K code | Negative allowance (you owe tax, e.g. unpaid from previous year) | Check your HMRC Personal Tax Account for the reason |
| S1257L | Scottish standard | Correct for Scottish residents |
| C1257L | Welsh standard | Correct for Welsh residents (Welsh rates currently match rUK) |
| NT | No tax — not typical for employees | Needs verification |
How to check and correct your tax code
Option 1: HMRC Personal Tax Account (quickest)
- Visit gov.uk/personal-tax-account
- Sign in with Government Gateway or GOV.UK One Login
- Your current tax code is displayed under "PAYE Income Tax"
- You can update your details and request a code change online
Option 2: Call HMRC
- Income Tax helpline: 0300 200 3300
- Lines open Monday–Friday 8am–6pm
- Have your National Insurance number and payslip to hand
Option 3: Check your P60 or P45
- Your P60 (issued by employer after 5 April) shows the tax code used during the year
- If your April or May 2026 payslip shows a different code to what you expect, call HMRC before more months pass
The cost of being on the wrong code
| Scenario | Monthly extra tax lost | Annual |
|---|---|---|
| BR code on £30,000 salary (should be 1257L) | ~£210 over-deducted | ~£2,514 |
| 0T emergency code on £35,000 | ~£130 over-deducted | ~£1,565 |
| Missing marriage allowance transfer (205L code) | ~£21 under-credited | ~£252 |
Tax overpaid due to a wrong code is refundable. HMRC will typically issue a P800 refund calculation after the tax year ends, but you can also claim in-year by contacting them.
National Insurance Calculator
Calculate your National Insurance contributions for 2025/26.
National Insurance calculator 2026/27A typical May 2026 payslip — what you should see
For a worker earning £35,000/year on plan 2 student loan, 1257L code:
| Item | Monthly amount |
|---|---|
| Gross pay | £2,916.67 |
| Income tax (1257L, basic rate) | -£384.17 |
| Employee NI (8%) | -£183.33 |
| Student loan Plan 2 (9% above £29,385) | -£39.86 |
| Net pay | £2,309.31 |
Compare to the same worker in April 2025 (£34,000 salary, plan 2 threshold £28,470):
| Item | Monthly (2025/26) | Monthly (2026/27) | Change |
|---|---|---|---|
| Gross pay | £2,833.33 | £2,916.67 | +£83.34 (assume 3% rise) |
| Income tax | -£370.83 | -£384.17 | -£13.34 |
| Employee NI | -£176.67 | -£183.33 | -£6.66 |
| Student loan (Plan 2) | -£32.93 | -£39.86 | -£6.93 |
| Net pay | £2,252.90 | £2,309.31 | +£56.41 |
Even after a modest 3% pay rise, the net gain is partly eaten by higher tax, NI, and student loan on the extra earnings.
What to do right now
- Find your May 2026 payslip — digital payslips are usually in your HR portal.
- Check your tax code — should be 1257L (England/Wales/NI), S1257L (Scotland), or C1257L (Wales with non-standard code).
- Verify the gross pay — are you receiving at least £12.71/hour if you're on NLW?
- Check your student loan deduction — is it using the correct plan and the 2026/27 threshold?
- Log into your Personal Tax Account at gov.uk — it shows your current code, past tax paid, and any adjustments.
Take-Home Pay Calculator
Calculate your net salary after income tax, National Insurance and student loan deductions.
See your exact 2026/27 take-home payRelated reading:
- UK tax codes explained: 1257L and what every code means
- Scotland vs England income tax 2026/27
- National Living Wage April 2026
- Salary sacrifice review 2026/27
Sources
- gov.uk: Income Tax rates and Personal Allowances
- gov.uk: National Minimum Wage rates
- Revenue Scotland: Scottish Income Tax 2026/27
- gov.uk: Student loan repayment thresholds
- HMRC: Tax codes
Frequently asked questions
Why is my take-home pay different in April/May 2026?
Several things changed from 6 April 2026: the National Living Wage rose to £12.71/hr, employee NI thresholds were reset, and student loan thresholds changed. The Personal Allowance and basic rate limit remain frozen at 2025/26 levels (£12,570 and £50,270 respectively).
What is the correct tax code for 2026/27?
For most people with one job, no untaxed income, and no unpaid tax from earlier years, the correct code is 1257L. This represents the £12,570 personal allowance. If your code is different, check your HMRC Personal Tax Account.
Did employee NI rates change in April 2026?
The rate itself (8% between £12,570 and £50,270) did not change, but the thresholds were confirmed and the annual reset means cumulative NI restarted from zero at the start of the tax year. The big NI change was on the employer side: rate rose from 13.8% to 15%.
What are the Scottish tax bands for 2026/27?
Scotland has five bands: Starter rate 19% (£12,571–£16,537), Basic rate 20% (£16,537–£29,526), Intermediate 21% (£29,526–£43,662), Higher 42% (£43,662–£75,000), Top rate 48% above £125,140.
Try the calculators
Related reading
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Your First Job in 2026: Understanding Tax, NI and Your Payslip
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