Rising payroll costs on both sides of the border: what employers should budget for in 2027

Payroll costs are increasing in both jurisdictions, with several important Irish changes now confirmed. Ireland’s national minimum wage rises by 79 cent to €14.94 an hour from 1 January 2027, while the weekly employer PRSI threshold increases from €552 to €600. MyFutureFund also introduces ongoing employer pension contributions. In the UK, the National Living Wage stands at £12.71, and employer National Insurance is generally 15% above the £5,000 annual secondary threshold. The April 2027 minimum wage rates remain unconfirmed. Businesses employing people across Northern Ireland and the Republic of Ireland should therefore budget separately for payroll costs in sterling and euro.

What is changing in Ireland from January 2027

Budget 2027 was announced on 6 October 2026, and Citizens Information’s Budget 2027 summary outlines the principal measures affecting employers and employees.

• The national minimum wage increases from €14.15 to €14.94 an hour from 1 January 2027 for workers aged 20 and over.
• The employer PRSI weekly earnings threshold increases from €552 to €600, reducing the risk that minimum wage increases push more employees into the higher contribution rate.
• Changes to personal income tax bands and credits should be reflected in payroll software once the relevant 2027 rates are implemented.
• Changes to Universal Social Charge thresholds may affect employees’ net earnings without directly increasing employers’ gross wage costs.
• Employers should also review employment supports and wage subsidy arrangements when preparing staffing budgets.

For someone working 39 hours weekly, the 79 cent hourly increase adds €30.81 each week, or approximately €1,602 annually, assuming 52 paid weeks.

That excludes employer PRSI, pension contributions and other associated employment costs.

PRSI rates also increased by 0.15 percentage points from 1 October 2026, as outlined in the Department of Social Protection’s advance notice.

These adjustments form part of a previously announced PRSI roadmap rather than being introduced exclusively through Budget 2027. Employers should therefore incorporate current contribution rates and review any further scheduled increases before finalising forecasts.

Auto-enrolment adds a second cost

Ireland’s MyFutureFund automatic enrolment scheme commenced on 1 January 2026.

As Citizens Information explains, automatic enrolment generally applies to employees aged between 23 and 60 who earn more than €20,000 annually across their employment and are not contributing to a qualifying pension through payroll.

Eligibility can also be assessed using earnings over a 13-week period.

Employers contribute 1.5% of eligible gross earnings from 2026 to 2028, increasing to 3% from 2029 to 2031. Employees make corresponding contributions, while the State provides additional contributions.

These costs should be included in payroll forecasts rather than treated as optional benefits.

Higher minimum wages can also affect enrolment eligibility. Employees previously earning below the threshold may qualify following increases in pay or working hours.

For businesses with substantial part-time workforces, reviewing individual eligibility will help prevent unexpected pension costs.

What is changing in the UK, and what is not yet decided

The UK position is relatively stable for 2026/27, although further changes are expected.

Current National Minimum Wage rates are £12.71 for workers aged 21 and over, £10.85 for those aged 18 to 20, and £8.00 for eligible younger workers and apprentices.

Employer National Insurance is generally charged at 15% on relevant earnings above the annual secondary threshold of £5,000.

Eligible businesses can also claim Employment Allowance of up to £10,500, according to the GOV.UK employer rates and thresholds.

Statutory Sick Pay is £123.25 weekly or 80% of average weekly earnings, whichever is lower, subject to the applicable entitlement rules.

The National Living Wage from April 2027 has not yet been announced.

The Autumn Budget is scheduled for 28 October 2026, and our guide to business tax changes to watch in the Autumn Budget explains the areas employers should monitor.

Until future rates are confirmed, businesses should allow for possible wage increases rather than assume existing rates will remain unchanged.

Cross-border payroll costs side by side

The following table summarises the main employment cost considerations, using confirmed 2026/27 UK rates and announced Irish changes for 2027.

Where cross-border employers get caught out

For businesses operating in both Northern Ireland and the Republic of Ireland, payroll complications often arise from employment arrangements, payment timing and currency movements rather than headline wage rates alone.

• Staff working in both jurisdictions. Employees working across the border may have different income tax and social insurance obligations depending on residence, work patterns and applicable coordination rules. Establish the correct treatment before processing payroll.
• Exchange rates. When employees receive euro salaries but business income is earned in sterling, exchange rate movements can increase effective employment costs. Our guide to sterling and euro books for cross-border SMEs explains practical reporting considerations.
• Group structure. The legal entity employing staff can affect taxation, administration and the availability of reliefs. Our article on setting up a company in both the UK and Ireland examines relevant business structures.
• Payroll deadlines. Missing payments to Revenue or HMRC can trigger interest, penalties and cash flow difficulties. Our guide to HMRC VAT and PAYE direct debits and cash flow explains why payment arrangements need careful planning.

Reviewing these issues before the start of 2027 can help businesses avoid unnecessary administrative complications.

How to budget for payroll in 2027

Effective payroll budgeting starts with separating confirmed changes from assumptions.

Employers should incorporate Ireland’s January minimum wage increase, current PRSI rates, relevant pension contributions and a reasonable allowance for future UK wage adjustments.

Foreign exchange exposure also needs consideration where income and employment costs arise in different currencies.

A practical approach involves the following steps.

1. List employees by jurisdiction, employment category, hourly rate and contracted working hours, including apprentices and part-time staff.
2. Apply Ireland’s new minimum wage and employer PRSI threshold from 1 January 2027.
3. Estimate the impact of potential UK wage increases and existing employer National Insurance obligations.
4. Identify employees eligible for MyFutureFund and calculate the applicable employer pension contribution.
5. Convert expected euro payroll costs using realistic exchange rate assumptions and test the effects of currency fluctuations.
6. Incorporate employment costs into a 13 week cash flow forecast and review broader assumptions using our guide to reforecasting for interest rates and inflation.

Reliable reporting is equally important.

Management accounts that distinguish payroll costs by business entity and jurisdiction make it easier to identify changes in operating margins.

Monitoring the key financial KPIs can also reveal whether employment costs are rising faster than revenue.

Businesses managing multiple currencies may benefit from cloud accounting systems that simplify reporting and reconciliation.

Companies operating with narrow profit margins may feel wage increases particularly quickly. For construction businesses, our article on protecting contractor margins from cost inflation offers additional guidance.

When payroll pressure becomes a cash flow problem

Payroll represents a substantial recurring expense for many businesses, often becoming payable before customers settle outstanding invoices.

Higher wages and employer contributions can widen this funding gap, making effective credit control and action on late payments increasingly important.

Warning signs include delayed supplier payments, growing tax arrears and repeated reliance on borrowing to meet wages.

Our guide to financial distress warning signs explains what businesses should monitor.

Experienced recovery accountants can help improve cash flow by examining costs, forecasts and working capital requirements.

Where payroll taxes are overdue, our guidance on HMRC tax debt outlines potential considerations.

If debts become unmanageable, a company voluntary arrangement may offer an eligible UK company a way to restructure qualifying debts while continuing to trade.

A licensed insolvency practitioner can assess the available options. Where suspected payroll irregularities arise, forensic accountants can investigate the underlying financial records.

Frequently asked questions

What is the Irish minimum wage in 2027?

Ireland’s national minimum wage increases from €14.15 to €14.94 an hour on 1 January 2027 for employees aged 20 and over. Different rates may apply to younger workers.

What is employer National Insurance in the UK?

For 2026/27, employer National Insurance is generally 15% on relevant earnings above the £5,000 annual secondary threshold per employee. Eligible employers may offset their liability through Employment Allowance of up to £10,500.

Do I have to enrol Irish employees in MyFutureFund?

Generally, eligible employees aged 23 to 60 who earn more than €20,000 annually and are not contributing to a qualifying pension through payroll are automatically enrolled. Earnings assessments may also use a 13-week reference period.

Will the UK minimum wage rise in April 2027?

The April 2027 rates have not yet been confirmed. The Government normally considers recommendations from the Low Pay Commission before announcing new rates. Employers should include an appropriate contingency in their payroll forecasts.

Plan your 2027 payroll with SCC

If your business employs people in both the UK and Ireland, we can help forecast employment costs, assess jurisdiction-specific obligations and identify potential cash flow pressures.

Speak to our team about cross-border accounting and tax or contact your nearest office at SCC Chartered Accountants before finalising your 2027 budgets.