Every employer in the United Kingdom is required by law to provide employees with a payslip each time they're paid. The Employment Rights Act 1996 (Employment Rights Act 1996) sets out exactly what must be included. Whether you have 1 employee or 50, here's how to get it right.
What Must a Payslip Include?
Section 33 of the Employment Rights Act 1996 requires the following information on every payslip:
- Employer's name and address
- Employee's name and job title
- Period of payment (e.g., 1 — 31 January 2026)
- Gross remuneration (salary before deductions)
- Deductions itemised — PAYE, National Insurance, pension, and any other deductions
- Net pay (actual amount paid to the employee)
- Overtime hours and payment (if applicable)
Failing to provide compliant payslips can result in fines from the GOV.UK.
Payslip vs. Pay Advice: What's the Difference?
They're essentially the same thing. "Payslip" and "pay advice" are used interchangeably in the United Kingdom. What matters is that it contains the information listed above and is provided to the employee on or before payday.
Understanding Each Deduction
PAYE (Pay As You Earn)
Income tax deducted based on HMRC tax tables. The amount depends on the employee's salary, age, and applicable rebates. Read our PAYE calculation guide for the full breakdown.
National Insurance
8% of earnings between £12,570 and £50,270 a year, then 2% above. The employer separately pays 15%. See our National Insurance contributions guide for details.
Pension / Provident Fund
If the employee belongs to a retirement fund, their contribution is deducted from gross pay. This reduces taxable income, which lowers the PAYE amount.
Medical Aid
Workplace pension contributions are deducted under auto-enrolment. The statutory minimum is 8% of qualifying earnings, of which at least 3% must come from the employer. Under a net pay arrangement the employee's share comes off before PAYE, reducing taxable pay.
Example Payslip Breakdown
Here's what a payslip looks like for an employee earning £2,000/month with pension and medical aid:
| Description | Amount |
|---|---|
| Gross Salary | £2,000 |
| Pension Fund (7.5%) | −£150 |
| PAYE | −£190 |
| National Insurance (1%) | −£20 |
| Medical Aid | −£210 |
| Net Pay | £1,400 |
3 Ways to Create Payslips
1. Spreadsheet (Manual)
You can build a payslip template in Excel or Google Sheets. However, you'll need to manually update tax tables each year, and errors in formulas can lead to incorrect deductions. This approach doesn't scale well beyond a few employees.
2. Payroll Software (Paid)
Full payroll systems like Sage or SimplePay handle everything — tax calculations, submissions to HMRC, and payslip generation. These are great for larger businesses but often cost £5+ per employee per month.
3. Free Online Payslip Generator (Recommended)
SmartSheets's free payslip generator calculates PAYE, National Insurance, and Apprenticeship Levy automatically using the latest HMRC tax tables. You enter the employee details and salary, choose a template, and download a professional PDF payslip. It's free, browser-based, and requires no installation.
Why use a generator over a spreadsheet? Tax tables change annually. A payslip generator keeps calculations current so you don't have to manually update formulas each March. It also reduces the risk of calculation errors that could lead to HMRC penalties.
Tips for Professional Payslips
- Be consistent — issue payslips on the same schedule (monthly or bi-weekly)
- Include your company logo — it looks professional and builds trust
- Keep records — store copies of all payslips for at least 3 years (HMRC requirement)
- Deliver securely — payslips contain sensitive information, so email them directly to employees or use a self-service portal
- Review annually — update tax tables and contribution ceilings each March
Employee Self-Service Portal
Instead of emailing payslips manually, consider setting up an employee self-service portal where staff can log in and view their own payslips, leave balances, and personal details. SmartSheets includes this for free with the Starter plan.
Next Steps
Ready to create your first payslip? Head to the payslip generator, enter your employee's details, and download a compliant PDF in under 2 minutes. No signup required for your first payslip.