UK Payslip Guide
What a UK payslip contains, how each deduction is worked out, and the terms you will see on the documents this platform produces.
What must appear on a payslip
Employees and workers are entitled to an itemised pay statement at or before the time they are paid. It must show gross pay, the amount and reason for each variable deduction, fixed deductions (either itemised or covered by a separate standing statement), the net amount payable and — where pay varies according to time worked — the number of hours being paid.
Gross pay
The total of all payments before deductions: basic salary or hourly pay, overtime, bonus, commission, holiday pay, statutory payments, allowances and any other earnings. Each line can be marked taxable, NI-able and pensionable independently.
PAYE Income Tax
PAYE is worked out from the employee's tax code, tax basis and jurisdiction. On a cumulative code, the free pay and band widths are pro-rated to the tax period and the tax already paid in the year is deducted, so tax evens out across the year. On a week 1 / month 1 code, each period is treated in isolation. Codes such as BR, D0 and D1 tax all pay at a single rate, 0T gives no free pay, NT deducts no tax, and K codes add notional pay.
National Insurance
Class 1 National Insurance is calculated on the earnings period, not annually, using thresholds such as the Lower Earnings Limit, Primary Threshold, Secondary Threshold and Upper Earnings Limit. The employee's category letter determines the rates that apply. Employer National Insurance is an employer cost — it is never deducted from the employee's net pay. Directors have an annual earnings period.
Workplace pensions
Contributions can be based on qualifying earnings, basic pay or total earnings. Under a net pay arrangement the employee's contribution reduces taxable pay; under relief at source it does not; under salary sacrifice both taxable and NI-able pay reduce. Automatic enrolment thresholds and qualifying earnings limits are held in the tax-year configuration.
Student and postgraduate loans
Repayments are 9% of earnings above the plan threshold for Plans 1, 2, 4 and 5, and 6% above the Postgraduate Loan threshold. The threshold used is the pay-period threshold, and deductions are rounded down to whole pounds.
Year to date
Payslips show cumulative totals for the tax year: gross pay, taxable pay, PAYE, National Insurance, pensions and loan repayments. These figures drive cumulative PAYE, so they must be correct. If you join part-way through a year, enter opening balances on the employee record.
Corrections
A finalised payslip is never silently changed. Instead a revision is created, the original is marked superseded, and both remain available. Where a payslip should not have been issued at all it can be voided with a reason, user and timestamp — the financial history is retained.
This guide is general information about UK payroll concepts, not tax or legal advice. Employers remain responsible for operating PAYE correctly and making required reports to HMRC.