How to Read Your Payslip UK — Every Box Explained

Your payslip tells you exactly where your money goes. Here’s how to understand every line.

Payslip Anatomy

The Basics

Section	What It Shows
Personal details	Name, employee number, NI number
Pay period	Week/month being paid
Payment date	When money arrives
Payments	What you’re being paid
Deductions	What’s taken off
Totals	Net pay and YTD figures

Example Payslip Layout

Payments	Amount
Basic salary	£2,500.00
Overtime	£150.00
Bonus	£0.00
Gross pay	£2,650.00

Deductions	Amount
Income tax	£314.60
National Insurance	£182.72
Pension	£132.50
Student loan	£0.00
Total deductions	£629.82

| Net pay | £2,020.18 |

Payments Explained

Types of Pay

Term	Meaning
Basic salary	Your regular contracted pay
Overtime	Extra hours worked
Bonus	Additional payments
Commission	Performance-based pay
Allowances	Travel, phone, etc.
Back pay	Owed from previous periods
Holiday pay	If paid separately

Gross Pay

Gross Pay	All payments before deductions
Annual salary ÷ 12	Monthly gross (salaried)
Hours × rate	Weekly gross (hourly)
Includes	Overtime, bonuses, allowances

Income Tax

How Tax Works

Tax Band (2024/25)	Rate	On Earnings
Personal Allowance	0%	£0-£12,570
Basic rate	20%	£12,571-£50,270
Higher rate	40%	£50,271-£125,140
Additional rate	45%	Over £125,140

Tax Codes Explained

Code	Meaning
1257L	Standard allowance (£12,570)
1257L M1/W1	Emergency — non-cumulative
BR	All taxed at basic rate (no allowance here)
D0	All taxed at higher rate
K	You owe tax — added to pay
0T	No personal allowance

Reading Your Tax Code

Example	Meaning
1257L	£12,570 tax-free (1257 × 10)
1100L	£11,000 tax-free
K475	£4,750 added to taxable income
S1257L	Scottish taxpayer
C1257L	Welsh taxpayer

Check Your Tax Code

Is It Right?	Check
One job?	Should be 1257L usually
Benefits in kind?	Reduces your code
Second job?	Usually BR
State Pension + job?	Allowance may be split
If wrong	Call HMRC, use personal tax account

National Insurance

NI Rates (2024/25)

Earnings	Employee NI	Rate
Up to £12,570/year	£0	0%
£12,570-£50,270	On this band	8%
Over £50,270	On excess	2%

NI Categories

Letter	Meaning
A	Standard (most employees)
B	Married women reduced rate
C	Over State Pension age
H	Apprentice under 25
M	Under 21

What NI Pays For

Contribution	Funds
State Pension	Your entitlement
NHS	Healthcare
Benefits	JSA, maternity, etc.

Pension Contributions

Auto-Enrolment Minimums

Contribution	Minimum
Employee	5% of qualifying earnings
Employer	3% of qualifying earnings
Total	8%

On Your Payslip

You Might See	Meaning
Pension	Your contribution
ER Pension	Employer contribution
AVC	Additional voluntary contribution
Salary sacrifice	Pre-tax pension

Tax Relief on Pensions

Scheme Type	Tax Relief
Net pay	Taken before tax (automatic)
Relief at source	Taken after tax (provider claims relief)
Salary sacrifice	Taken before tax and NI

Student Loan

Repayment Thresholds (2024/25)

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

Calculation

Step	Calculation
1	Annual salary above threshold
2	Calculate 9% (or 6% PG)
3	Divide by 12 for monthly
4	Deducted automatically

Example (Plan 2, £32,000 salary)

Calculation	Amount
£32,000 - £27,295	£4,705 over threshold
£4,705 × 9%	£423.45 annual repayment
÷ 12	£35.29 monthly

Other Deductions

Common Deductions

Deduction	What It Is
Pension	Your contribution
Student loan	Repayment
Union dues	If member
Childcare vouchers	Pre-tax scheme
Cycle scheme	Salary sacrifice
Give As You Earn	Charity donations
Court orders	If applicable
Season ticket loan	If employer provides

Benefits in Kind

If Provided	May See
Company car	Tax adjustment
Health insurance	Tax adjustment
These usually	Affect tax code, not payslip deduction

Year-to-Date (YTD)

What YTD Shows

YTD Figure	Meaning
Gross pay YTD	Total earned this tax year
Tax YTD	Total tax paid
NI YTD	Total NI paid
Pension YTD	Total contributions

Why It Matters

Use	Benefit
Check P60	Should match at year end
Spot errors	Cumulative mistakes
Tax refund claims	Know what you’ve paid
Mortgage applications	Prove income

Spotting Errors

Common Mistakes

Error	How to Spot
Wrong tax code	Check yours is correct
Wrong NI deducted	Calculate and compare
Pension missing	Check against contribution
Hours wrong	If paid hourly
Overtime missing	Check against worked

What to Do

Step	Action
1	Query with payroll first
2	Check next payslip for correction
3	If tax code wrong, contact HMRC
4	Keep copies of payslips

Summary: Payslip Checklist

Every Month Check

Item	Correct?
Personal details	☐
Pay period	☐
Gross pay	☐
Tax code	☐
Tax deducted	☐
NI deducted	☐
Pension contribution	☐
Net pay	☐

Know Your Numbers

Figure	Yours
Annual salary	£
Monthly gross	£
Tax code
Expected tax	£
Expected NI	£
Expected net	£

Key Contacts

Issue	Contact
Payslip errors	Employer payroll
Tax code wrong	HMRC (0300 200 3300)
NI number issues	HMRC
Student loan	Student Loans Company

Useful Resources

Resource	For
Gov.uk tax checker	Calculate expected tax
Personal tax account	Check tax code, records
Salary calculator	Estimate take-home

Understanding your payslip helps you spot errors and understand where your money goes. Check it every month — payroll mistakes happen more often than you’d think, and it’s your money at stake.