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Guide to UK payroll deductions

  • Swot up on different payroll deductions in the UK

  • Understand what your legal obligations are

  • Review the reporting requirements involved

FormatPDF
Publication dateDecember 22, 2025
AuthorThe PayFit team

Deductions are a fact of payroll

For every staff member you hire, you will need to make payroll deductions. While some of these, like pensions and benefits, are voluntary, others, like income tax and National Insurance, are mandatory.

There are certain deductions you need to make

Running payroll isn’t always easy. But with this guide to payroll deductions, you can learn exactly what you need to take out of your employees’ pay packs each month.

Learn what reporting is required

Making deductions is one thing, but equally important is reporting these to HMRC. How you report these is dependent on the type of deduction. We break it all down in the guide.

Included in this guide:

An overview of different type of deductions

An overview of different type of deductions

Learn what reporting requirements are involved

Learn what reporting requirements are involved

Review your obligations around taxable benefits

Review your obligations around taxable benefits

FAQs

Common payroll deductions include things like National Insurance Contributions (NICs), pension contributions, student loan repayments, and income tax. 

It’s illegal to deduct wages when an employee or worker is being underpaid. It’s also illegal to make unauthorised deductions from an employee's paycheck.