uk-payroll

United Kingdom -- Payroll Skill v1.0

Year applicability: Rules in this skill apply across 2024-25, 2025-26, and 2026-27 unless a specific section flags a year-dated change. The pack is read alongside the rate-bearing skills (uk-income-tax-sa100, uk-national-insurance, uk-dividends, etc.) which carry full 3-year tables.

Verified rates & thresholds (accountant-reviewed)

Reviewed against the cited tax authorities by James Power on 2026-06-03. Items flagged for further clarification are tracked separately and excluded here. This block is generated from verified skill_facts — edit the facts, not the prose.

Payroll

• Below LEL (£125/wk) — 0% (no qualifying year) (SSCBA 1992)
• LEL to PT (£125-£242/wk) — 0% (qualifying year accrues) (SSCBA 1992)
• PT to UEL (£242-£967/wk) — 8% (SSCBA 1992)
• Above UEL (>£967/wk) — 2% (SSCBA 1992)
• Secondary Threshold — £5,000/year (£96/wk) (SSCBA 1992)
• Rate above ST — 15% (no upper limit) (SSCBA 1992)
• Employment Allowance — £10,500/year (NIC Act 2014)
• Class 1A (benefits) — 15% of taxable BIK value (SSCBA 1992)
• Age 21+ (NLW) — £12.21/hr (NMW Regs)
• Age 18-20 — £10.00/hr (NMW Regs)
• Under 18 / Apprentice — £7.55/hr (NMW Regs)
• Age 21+ (NLW) — £12.71/hr (NMW Regs)
• Age 18-20 — £10.85/hr (NMW Regs)
• Under 18 / Apprentice — £8.00/hr (NMW Regs)
• SSP weekly rate — £118.75 (SSCBA 1992)
• SMP — first 6 weeks — 90% of AWE (SSCBA 1992)
• SMP — weeks 7-39 — £187.18/wk or 90% AWE, lower (SSCBA 1992)
• SPP — £187.18/wk (2 weeks) (SSCBA 1992)
• SSP weekly rate — £123.25 (Finance Act)
• SSP waiting days (from Apr 2026) — Abolished — day 1 (Finance Act)
• SMP flat rate (from Apr 2026) — £194.32/wk (Finance Act)
• Total minimum contribution — 8% of qualifying earnings (Pensions Act 2008)
• Employer minimum — 3% (Pensions Act 2008)
• Qualifying earnings band — £6,240 – £50,270 (Pensions Act 2008)
• Eligible jobholders — Age 22 to SPA, earning >£10,000/yr (Pensions Act 2008)
• FPS — On or before each payday (PAYE Regs)
• EPS — By 19th of following month (PAYE Regs)
• P60 to employees — By 31 May (PAYE Regs)
• P11D — By 6 July (PAYE Regs)
• HMRC payment (electronic) — 22nd of following month (PAYE Regs)
• Apprenticeship Levy — 0.5% of pay bill >£3m (£15,000 allowance) (Finance Act 2016)

Section 1 -- Quick Reference

Section 1 -- Quick Reference

Field	Value
Country	United Kingdom (England, Wales, Scotland, Northern Ireland)
Currency	GBP (£) only
Tax year	6 April -- 5 April
Primary legislation	Income Tax (Earnings and Pensions) Act 2003; Social Security Contributions and Benefits Act 1992
Tax authority	HM Revenue and Customs (HMRC)
Reporting system	Real Time Information (RTI)
Pay frequency	Monthly (most common), weekly, fortnightly, four-weekly
Employer registration	PAYE scheme via HMRC Online Services
Validated by	Verified by James Power on 2026-06-03
Skill version	1.0

Section 2 -- Income Tax Withholding (PAYE)

PAYE (Pay As You Earn) is a cumulative withholding system. The employer applies tax codes issued by HMRC to calculate tax due on each payment.

Tax Bands -- England, Wales & Northern Ireland (2025/26)

Tax Bands -- England, Wales & Northern Ireland (2025/26)

Band	Annual Income (£)	Rate
Personal Allowance	0 -- 12,570	0%
Basic rate	12,571 -- 50,270	20%
Higher rate	50,271 -- 125,140	40%
Additional rate	125,141+	45%

Scotland has separate income tax bands (starter, basic, intermediate, higher, advanced, top). Always check the employee's tax code prefix (S = Scotland, C = Wales).

Key Tax Code Rules

Key Tax Code Rules

Code	Meaning
1257L	Standard personal allowance £12,570 (2025/26)
BR	All pay taxed at basic rate (no allowance)
D0	All pay taxed at higher rate
D1	All pay taxed at additional rate
NT	No tax deducted
0T	No personal allowance (used when allowance exhausted)
K prefix	Negative allowance -- tax code adds to taxable pay
W1/M1 suffix	Non-cumulative (week 1/month 1) basis

Personal Allowance Taper

• Personal Allowance Taper — The £12,570 personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000. It reaches zero at £125,140.

Student Loan Deductions (2025/26)

Student Loan Deductions (2025/26)

Plan	Threshold (annual)	Rate
Plan 1 (pre-2012)	£24,990	9%
Plan 2 (post-2012)	£27,295	9%
Plan 4 (Scotland)	£31,395	9%
Plan 5 (post-2023)	£25,000	9%
Postgraduate loan	£21,000	6%

Section 3 -- Social Security: Employee Deductions (National Insurance)

Class 1 Primary (Employee) NIC -- 2025/26

Class 1 Primary (Employee) NIC -- 2025/26

Earnings Band	Weekly	Annual	Rate
Below LEL	< £125	< £6,500	0% (no NI, no qualifying year)
LEL to PT	£125 -- £242	£6,500 -- £12,570	0% (qualifying year accrues)
PT to UEL	£242 -- £967	£12,570 -- £50,270	8%
Above UEL	> £967	> £50,270	2%

Class 1 Primary (Employee) NIC -- 2026/27

• Class 1 Primary (Employee) NIC -- 2026/27 — Same thresholds except LEL rises to £129/week (£6,708/year). Rates remain 8% / 2%.

Section 4 -- Social Security: Employer Contributions (National Insurance)

Class 1 Secondary (Employer) NIC -- 2025/26 and 2026/27

Class 1 Secondary (Employer) NIC -- 2025/26 and 2026/27

Threshold	Weekly	Annual	Rate
Secondary Threshold (ST)	£96	£5,000	--
Above ST	> £96	> £5,000	15%

• No upper limit — No upper limit -- employer NIC at 15% applies on all earnings above the ST with no cap.

Employment Allowance

• Employment Allowance — Up to £10,500 per year offset against employer NIC. Not available if the sole employee is a director, or if prior-year employer NIC exceeded £100,000.

Reduced Rates for Specific Categories

Reduced Rates for Specific Categories

Category	Employer NIC on earnings up to £967/week
Under 21 (letter M)	0% up to UEL, 15% above
Apprentice under 25 (letter H)	0% up to UEL, 15% above
Armed forces veteran (letter V)	0% up to UEL, 15% above
Freeport employee (letter F)	0% up to FUST, 15% above

Class 1A NIC

• Class 1A NIC — Employer pays 15% on the taxable value of most benefits in kind (company car, private medical, etc.). Reported on P11D and paid by 22 July following the tax year.

Section 5 -- Minimum Wage and Overtime

National Minimum / Living Wage Rates

National Minimum / Living Wage Rates

Category	From 1 Apr 2025	From 1 Apr 2026
Age 21+ (National Living Wage)	£12.21/hr	£12.71/hr
Age 18--20	£10.00/hr	£10.85/hr
Under 18 / Apprentice	£7.55/hr	£8.00/hr
Accommodation offset	£10.66/day	£11.10/day

Overtime

• Overtime — No statutory overtime premium in the UK. Overtime rates are contractual, not legally mandated. However, average hourly pay including overtime must not fall below NMW/NLW.

Working Time Regulations

• Working Time Regulations — Maximum average 48 hours/week (averaged over 17 weeks) unless the employee has opted out in writing. Night workers are limited to 8 hours in any 24-hour period on average.

Section 6 -- Mandatory Benefits

Statutory Sick Pay (SSP)

Statutory Sick Pay (SSP)

Item	2025/26	2026/27
Weekly rate	£118.75	£123.25
Waiting days	3 days (abolished from 6 Apr 2026)
Maximum duration	28 weeks	28 weeks
Earnings threshold (LEL)	£125/week	Abolished from 6 Apr 2026

• SSP change from Apr 2026 — From 6 April 2026, SSP is paid from day 1 of sickness and the LEL threshold is removed. SSP is paid at 80% of normal weekly earnings or the flat rate, whichever is lower.

Statutory Maternity Pay (SMP)

Statutory Maternity Pay (SMP)

Period	Rate
First 6 weeks	90% of average weekly earnings (AWE)
Remaining 33 weeks	£187.18/week (2025/26) or 90% AWE, whichever is lower
From 6 Apr 2026	£194.32/week for the flat-rate portion

• Entitlement & qualifying conditions — Total entitlement: 39 weeks. Qualifying conditions: 26 weeks' continuous service by the 15th week before EWC and AWE ≥ LEL.

Statutory Paternity Pay (SPP)

• Statutory Paternity Pay (SPP) — 2 weeks at the lower of £187.18/week (£194.32 from Apr 2026) or 90% AWE.

Statutory Adoption / Shared Parental / Bereavement / Neonatal Care Pay

• Statutory Adoption / Shared Parental / Bereavement / Neonatal Care Pay — Same flat rate as SMP (£187.18 / £194.32 from Apr 2026).

Holiday Entitlement

• Holiday Entitlement — Minimum 5.6 weeks (28 days for full-time). Includes bank holidays unless contractually additional. Pro-rated for part-time. Rolled-up holiday pay is now permitted from 1 January 2024 for irregular-hours and part-year workers.

Workplace Pension (Auto-Enrolment)

Workplace Pension (Auto-Enrolment)

Parameter	Value
Minimum total contribution	8% of qualifying earnings
Minimum employer contribution	3% of qualifying earnings
Qualifying earnings band	£6,240 -- £50,270 (2025/26)
Eligible jobholders	Age 22 to SPA, earning > £10,000/year

Section 7 -- Payslip Requirements

• Payslip requirement — Employers must provide itemised payslips on or before payday (Employment Rights Act 1996 s8). (Employment Rights Act 1996 s8)

Mandatory Payslip Contents

• Gross pay
• Net pay
• All deductions (PAYE, NIC, student loan, pension) with amounts and descriptions
• Variable deductions: fixed deductions may reference a standing statement
• Hours worked (if pay varies by hours) -- mandatory from April 2019

Optional but Recommended

• Tax code and NI category letter
• Employer and employee pension contributions
• Cumulative pay and tax year-to-date
• NI number
• Pay period and pay date

Section 8 -- Filing Obligations

Real Time Information (RTI)

Real Time Information (RTI)

Submission	When	Content
Full Payment Submission (FPS)	On or before each payday	Employee pay, tax, NIC, student loans, statutory payments
Employer Payment Summary (EPS)	By 19th of following month	Statutory pay recoveries, Employment Allowance, CIS deductions suffered, apprenticeship levy
Earlier Year Update (EYU)	After 19 April (prior year corrections)	Adjustments to prior-year FPS totals

Payment to HMRC

Payment to HMRC

Method	Deadline
Electronic payment	22nd of following month (or 22nd quarterly for small employers)
Cheque	19th of following month

Year-End Obligations

Year-End Obligations

Task	Deadline
Final FPS of year	On or before last payday of tax year
P60 to employees	By 31 May
P11D / P11D(b) (benefits in kind)	By 6 July
Class 1A NIC payment	By 22 July (electronic)

Apprenticeship Levy

• Apprenticeship Levy — Employers with annual pay bill > £3 million pay 0.5% of total pay bill, offset by a £15,000 annual allowance.

Section 9 -- Common Payroll Patterns

Pattern 1 -- Standard Monthly Employee (Category A)

• Pattern 1 -- Standard Monthly Employee (Category A) — Gross salary £3,500/month. Tax code 1257L. 1. PAYE: (£3,500 × 12 - £12,570) × 20% ÷ 12 = £595.50/month (cumulative calc) 2. Employee NIC: (£3,500 - £1,048) × 8% = £196.16/month 3. Employer NIC: (£3,500 - £417) × 15% = £462.45/month 4. Auto-enrolment pension (employee): (£3,500 - £520) × 5% = £149.00 5. Auto-enrolment pension (employer): (£3,500 - £520) × 3% = £89.40

Pattern 2 -- Director NIC Calculation

• Pattern 2 -- Director NIC Calculation — Directors may use either the annual earnings period method (standard) or the alternative method (cumulative per pay period). The annual method defers NIC until cumulative earnings exceed the annual threshold. Most payroll software defaults to the annual method; the alternative method requires explicit election.

Pattern 3 -- Starter with No P45

• Pattern 3 -- Starter with No P45 — Apply HMRC starter checklist. Use one of three statements: - A: First job since 6 April -- apply 1257L on cumulative basis - B: Currently has another job -- apply BR - C: Has another source of income -- apply BR

Pattern 4 -- Statutory Payment Recovery

• Pattern 4 -- Statutory Payment Recovery — Standard employers recover 92% of SMP/SAP/ShPP/SPBP/SNCP. Small employers (Class 1 NIC ≤ £45,000 in qualifying year) recover 100% + 9% compensation (109% total from Apr 2026). SSP cannot be recovered.

Section 10 -- Interaction with Other Skills

Section 10 -- Interaction with Other Skills

Skill	Interaction
payroll-workflow-base	Provides generic payroll processing steps; this skill adds UK-specific rules
uk-bookkeeping	Payroll journals (gross pay, ER NIC, ER pension = P&L; net pay, PAYE/NIC liability, pension liability = BS)
uk-corporation-tax	Employer NIC and pension contributions are allowable deductions for CT
uk-vat	No VAT on wages, but benefits in kind may have VAT implications

Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.

The most up-to-date, verified version of this skill is maintained at openaccountants.com. Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.

Talk to a verified accountant

This skill is a tool, not an engagement. Every taxpayer's situation is different, and the rules in the skill may not match your specific facts.

To speak with one of the licensed accountants who verifies skills for your jurisdiction — no liability on either side until you and the accountant sign a formal engagement letter — book a free 30-minute call:

→ Book a call

We'll route you to the named verifier covering your country or state. You can also see the full list of verified accountants at openaccountants.com/network.