How to Create a UK Payslip With PAYE and NI Deductions

Why UK Payslips Must Meet Strict Legal Standards

Under the Employment Rights Act 1996, every UK employer is legally required to provide employees with an itemised pay statement before or on each payday. Since April 2019, this obligation extends to workers as well, not just employees. Failure to comply can lead to employment tribunal claims and penalties.

A compliant UK payslip is more than a courtesy -- it is a legal document. Getting the deductions right protects both you and your staff.

What Must Appear on a UK Payslip

UK law mandates the following fields:

• Gross pay -- the total amount earned before deductions
• Net pay -- the take-home amount after all deductions
• Variable deductions -- each deduction must be listed with its amount (e.g., PAYE, NI)
• Fixed deductions -- can be shown as an aggregate with a separate standing statement
• Hours worked -- required where pay varies by time worked
• Employer name and employee name
• Pay period and payment date
• National Insurance number

PAYE Income Tax Bands (2025/26)

The UK uses a progressive tax system under Pay As You Earn (PAYE):

Band	Taxable Income	Rate
Personal Allowance	Up to 12,570	0%
Basic Rate	12,571 -- 50,270	20%
Higher Rate	50,271 -- 125,140	40%
Additional Rate	Over 125,140	45%

Your employee's tax code, issued by HMRC, determines how much of their income is tax-free each pay period.

National Insurance Contributions (NICs) -- Class 1

Both employer and employee pay NICs on earnings above certain thresholds:

Contributor	Earnings Bracket	Rate
Employee	12,570 -- 50,270 per year	8%
Employee	Above 50,270 per year	2%
Employer	Above 9,100 per year (secondary threshold)	13.8%

Employer NICs do not appear as a deduction on the employee's payslip, but you must calculate them for your own records and RTI submissions.

Student Loan Deductions

If an employee has an active student loan, HMRC will notify you via their tax code or a Start Notice (SL1). Repayment rates depend on the plan:

Plan	Threshold (Annual)	Rate
Plan 1	24,990	9%
Plan 2	27,295	9%
Plan 4 (Scotland)	31,395	9%
Postgraduate Loan	21,000	6%

Deductions apply only to earnings above the relevant threshold.

Pension Auto-Enrolment

Eligible employees must be automatically enrolled into a qualifying workplace pension. The minimum contributions are:

Contributor	Minimum Rate
Employee	5% of qualifying earnings
Employer	3% of qualifying earnings

Qualifying earnings fall between 6,240 and 50,270 per year. The employee contribution appears as a payslip deduction.

Step-by-Step: Creating a UK Payslip With CleverSlip

Step 1 -- Select the UK Template

Open CleverSlip and choose the United Kingdom payslip template. It comes pre-configured with PAYE, NI, student loan, and pension fields so you do not need to build the layout from scratch.

Step 2 -- Enter Employee and Employer Details

Fill in the company name, employee name, NI number, tax code, pay period, and payment date.

Step 3 -- Input Gross Pay and Hours

Enter the gross salary or hourly rate with hours worked. CleverSlip will display gross pay prominently as required by law.

Step 4 -- Add Deductions

Enter the PAYE amount based on the employee's tax code and the correct NI contribution. Add student loan repayments and pension contributions where applicable. Each deduction is itemised automatically.

Step 5 -- Review and Download

CleverSlip calculates net pay and generates a professional PDF. Review the figures, then download or send the payslip directly to your employee.

Stay Compliant Without the Complexity

UK payroll deductions involve multiple overlapping rules -- tax codes, NI thresholds, student loan plans, and pension minimums. CleverSlip simplifies the process by giving you a structured, compliant template that ensures nothing is missed. Create your first UK payslip in minutes and keep your records audit-ready.