Hospitality payroll: Three key changes you can’t afford to miss

What’s happening? Moore Kingston Smith outlines the approaching changes.

From April 2027, all employers must payroll benefits in kind (BIKs) and taxable employment expenses. This means:

• The taxable value of benefits (like staff meals, health insurance or travel allowances) will be added to employees’ pay through payroll.

• Income tax will be deducted in real time, no more waiting for P11D forms.

• Employees will see these benefits on their payslips, making things clearer for everyone.

  
  

Why does this matter for hospitality?

If you provide perks like staff meals or uniform allowances, these will now be taxed through payroll. Also, high turnover in hospitality can make the P11d reporting time consuming with an additional complexity of high number of leavers. By processing benefits in a real time, would mean that leavers would be dealt at the time or leaving with no further reporting post leaving dates. This streamlines admin, but you’ll need to ensure your payroll systems are ready.

What should you do now?

• You don’t have to wait until 2027, you can start payrolling benefits voluntarily.

• Registration isn’t needed for most benefits from April 2027, with the exception of loans and accommodation.

• If you want to start early for the 2026/27 tax year, register with HMRC by 6 April 2026. 

  
  

Statutory sick pay (SSP): Immediate support for hospitality staff 

What’s changing?

From the 2025 Autumn Budget, employees will now receive statutory sick pay (SSP) from the very first day they’re off sick, no more waiting three days. Plus, the minimum earnings threshold has been removed, so even your part-time or casual team members (think waiting staff, kitchen porters or baristas on variable hours) will qualify for SSP.

How will it work?

• SSP will be paid at the lower of the standard flat rate or 80% of average weekly earnings.

• All employees, regardless of how much they earn, are now covered.

  
  

What does this mean for hospitality businesses?

This is great news for staff, especially in our sector where many rely on every shift. But for employers, especially those running restaurants, hotels or bars with tight margins, it means higher costs. Short-term absences will now have an immediate financial impact. You’ll need to budget for more frequent SSP payments, especially during busy periods or seasonal peaks. 

Pension salary sacrifice cap: changes ahead for hospitality employers 

From April 2029

The government is capping the National Insurance (NI) exemption on pension salary sacrifice. Employees can still sacrifice up to £2,000 per year without extra NI, but anything above that will now attract both employer and employee NI charges.

Example for hospitality

Let’s say your hotel manager earns £50,000 and contributes 5% of salary to their pension via salary sacrifice:

• Employee NI goes up by £40 a year

• Employer NI goes up by £75 a year

Many hospitality employers currently pass NI savings back into staff pensions. After April 2029, these savings will shrink, so both take-home pay and pension contributions could drop. This is especially relevant for larger venues or groups with generous pension schemes.

What should you do?

Review your current pension arrangements now. If you run a chain of restaurants or a busy events venue, understanding the impact on your payroll and staff benefits is crucial for budgeting and staff retention.

In summary

These payroll changes are designed to support employees and modernise payroll processes, but they bring new challenges for hospitality businesses. Whether you run a boutique hotel, a busy café or a national restaurant chain, now is the time to review your payroll practices, update your systems and communicate changes to your teams. Contact us today.