How to understand your UK payslip

What each line on a UK payslip means, from gross pay to net pay, with links to the gov.uk pages that explain the rules.

Your pay landed in your account and it is lower than you expected. The payslip should explain why. This guide walks through the lines you will usually see, in the order they appear.

Your employer must give you a payslip, on paper or online, on or before payday. gov.uk sets out what it has to show in its guidance on payslips. Layouts differ between employers, but the same ideas sit underneath.

Gross pay

Gross pay is what you earn before anything is taken off. It includes your basic pay and anything added on top, such as overtime, bonuses or commission. If your payslip shows these separately, check each one against what you agreed.

Deductions that come out before tax

Some deductions reduce the pay that tax is worked out on. The most common is a workplace pension. If your employer uses a "net pay" arrangement, your pension contribution is taken before income tax is calculated. If it uses "relief at source", the pension provider claims the basic rate tax relief for you instead. Your payslip or pension provider can tell you which one applies. gov.uk explains both in its guidance on tax relief on pension contributions.

Income tax

Income tax is worked out using your tax code. The code tells your employer how much of your pay is tax free and whether anything else needs adjusting. You will find it on your payslip, usually as a few numbers followed by a letter.

Check three things.

The code matches the one on any letter from HM Revenue and Customs.
It has not changed without a reason you understand.
It fits your situation, for example if you have more than one job.

gov.uk explains how to read a code in its guide to tax codes. If your code looks wrong, contact HM Revenue and Customs through your personal tax account rather than asking your employer to guess.

National Insurance

National Insurance is a separate deduction from income tax. It builds up your entitlement to certain benefits, including the State Pension. Your payslip shows an amount and usually a letter, called the category letter. The letter depends on your age and circumstances. gov.uk lists the categories and what they mean on its page about National Insurance rates and categories.

Student loan and other deductions

If you have a student loan, repayments come out through payroll. The plan type decides the threshold at which repayments start. gov.uk explains each plan in its guidance on repaying your student loan.

Other deductions you might see include a union fee, a season ticket loan or a charity giving scheme. Each one should have a clear label. If a line has a code you do not recognise, ask your payroll team what it is.

Net pay

Net pay is what you take home. It is gross pay, minus all the deductions above. This is the figure that reaches your bank account. If it does not match what hits your account, ask payroll before assuming a mistake. Some employers pay expenses separately, and some pay on a different day to the payslip date.

Year to date figures

Most payslips show totals so far in the tax year, which runs from 6 April to 5 April. These are useful when you check your annual tax summary or fill in a form that asks for your pay so far. They also help you spot a problem early. If your year to date tax is lower than it should be, you may owe the difference later.

A quick check you can do each month

Here is a short routine that takes about five minutes.

Compare gross pay to your contract or latest pay rise letter.
Look at your tax code and make sure it has not changed unexpectedly.
Check that pension and student loan amounts are what you expect.
Compare net pay to what arrived in your bank.

If any line looks wrong, tell your employer in writing and keep the payslip. If it is not fixed, you can raise it with HM Revenue and Customs for tax questions, or with Acas for wider pay disputes.

When your pay does not add up

Sometimes there is no mistake. A new tax code can take a month or two to apply. A bonus can push one month's tax higher than usual, because payroll works out tax on a running basis through the year. An unpaid leave period can reduce both pay and the amount of tax free pay used so far.

Check your own figures

Enter your salary in the UK take-home pay calculator and compare the result with your payslip. The calculator gives an estimate, so small differences are normal, especially if you have a pension, a student loan or more than one job. Large differences are worth asking about.

Sources

This guide explains general rules. It is not tax advice. Rates and thresholds change each tax year, so check gov.uk for the current figures.