National Payroll Week recognises the essential role payroll professionals play across the UK. It’s an opportunity to refresh your knowledge of compliance requirements, celebrate the accuracy that ensures employees are paid correctly, and recognise the skill and complexity behind every payslip.

Each April brings changes to thresholds, statutory rates and pension rules. Getting these figures wrong—or applying them incorrectly—can leave clients exposed to underpayment claims, HMRC penalties and reputational damage.

Payroll is about much more than simply transferring money from employer to employee. It involves regulatory compliance, tax accuracy and maintaining positive employee relationships. A mistake when calculating Statutory Maternity Pay or overlooking a seasonal worker’s holiday accrual can quickly escalate into disputes, financial penalties and hours spent correcting payroll records.

National Payroll Week provides the perfect opportunity to make sure the team is up to date with this year’s rates and, just as importantly, confident in applying them accurately and consistently.

Here are some payroll essentials business owners need to understand.

What’s the difference between Gross Pay and Net Pay?

Gross pay is the employee’s total agreed salary or wages before any deductions are applied. Net pay, often referred to as take-home pay, is the amount they actually receive in their bank account after Income Tax, National Insurance, pension contributions and any other applicable deductions have been taken.

Employers typically discuss salaries in gross terms, while employees are naturally more focused on what they will actually receive each month. A £30,000 annual salary, for example, does not mean £30,000 will reach the employee’s bank account. Being able to clearly explain how gross pay is calculated and how it translates into net pay can help maintain positive employee relations and manage expectations from the outset.

Many employers underestimate the difference between gross and net pay. For example, an employee earning £35,000 gross could take home around £27,000, depending on factors such as their tax code, National Insurance, pension contributions and other deductions. Seeing the deductions on their first payslip can come as a surprise, particularly when expectations haven’t been clearly communicated.

Explaining these deductions during onboarding can help avoid confusion, reduce payroll-related queries and ensure employees have a realistic understanding of what they can expect to receive in their bank account.

A few examples of Statutory requirements on Payroll and Employers:

Current National Insurance Rates and Thresholds in the UK

The 2026/27 tax year brings the following National Insurance thresholds and rates:

• Employee National Insurance: 8% on earnings above the primary threshold of £12,570 per year.
• Employer National Insurance: 15% on earnings above the secondary threshold of £5,000 per year, with relief available for employees under 21 and apprentices under 25.

Statutory Sick Pay (SSP) in 2026/27 Tax Year

Statutory Sick Pay (SSP) is the minimum amount employers are legally required to pay eligible employees when they are off work due to sickness. From April 2026, the SSP rate is £123.25 per week, or 80% of the employee’s average weekly earnings, whichever is lower. SSP can be paid for up to 28 weeks.

To calculate SSP, you generally need to determine the employee’s average weekly earnings over the previous eight weeks. If an employee has only recently joined the business and has not yet completed eight weeks of employment, SSP is calculated using the earnings available for the period they have worked.

For part-time or irregular-hours employees, the daily SSP amount is based on the weekly rate divided by the number of qualifying days—the days on which the employee normally works. For example, if a five-day-a-week employee is off sick for three qualifying days, they would receive three-fifths of the weekly SSP rate, subject to the applicable earnings limit.

Where 80% of the employee’s average weekly earnings is lower than £123.25, that lower amount is used instead. The calculation can be straightforward once the process is understood, but mistakes can easily occur if qualifying days, average earnings or the applicable rate are calculated incorrectly.

SSP for 2026/27: £123.25 per week or 80% of average weekly earnings, whichever is lower, for up to 28 weeks.

What is Auto-Enrolment and Opt-Outs?

Employers must automatically enrol eligible workers aged 22 up to State Pension age who earn at least £11,500 gross per year into a qualifying workplace pension scheme. The minimum total contribution is 8% of qualifying earnings, which can be made up of a minimum 3% employer contribution and 5% employee contribution.

Employees have the right to opt out of the pension scheme within one month of being enrolled. Employers must provide clear information about the opt-out process and ensure employees understand their rights.

If an employee chooses to opt out, the employer has no further obligation to make pension contributions until the employee is automatically re-enrolled. Eligible employees who have opted out must generally be re-enrolled every three years.

If you have any questions on any of the points raised, please reach out to your Advo Account Manager. We are always here to help.

Article written by Ed Knight MCIPP, Senior Payroll Advisor