Incomes
How to Read Your Payslip UK
Understanding every part of your payslip. What the codes mean, how deductions are calculated, and what to check for errors.
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3 min read
Understanding your payslip helps you spot errors and know where your money goes.
Payslip Sections
Typical Layout
| Section |
Contains |
| Employee details |
Name, NI number, payroll number |
| Pay period |
Dates covered |
| Payments |
Earnings breakdown |
| Deductions |
What’s taken off |
| Totals |
Net pay, year-to-date |
What to Check
| Field |
Check For |
| Name |
Correctly spelled |
| NI number |
Your number |
| Employee number |
Reference |
| Tax code |
Correct code |
| Pay date |
When paid |
| Pay period |
Which month/week |
Your NI Number
| Format |
Example |
| Two letters |
AB |
| Six digits |
123456 |
| One letter |
C |
| Full example |
AB123456C |
Payments Section
Common Payment Types
| Payment |
Meaning |
| Basic pay |
Your standard salary |
| Overtime |
Extra hours worked |
| Bonus |
One-off payment |
| Commission |
Sales-based pay |
| Holiday pay |
If separate |
| Sick pay |
If applicable |
Understanding Your Pay
| Term |
Meaning |
| Gross pay |
Total before deductions |
| Taxable pay |
Amount subject to tax |
| NI-able pay |
Amount subject to NI |
Example Payments Section
| Payment Type |
Amount |
| Basic salary |
£2,916.67 |
| Overtime (5hrs) |
£125.00 |
| Gross pay |
£3,041.67 |
Deductions Section
Standard Deductions
| Deduction |
What It Is |
| PAYE tax |
Income Tax |
| Employee NI |
National Insurance |
| Pension |
Your contribution |
| Student loan |
If applicable |
Optional/Other Deductions
| Deduction |
If Applicable |
| Childcare vouchers |
Pre-tax benefit |
| Cycle scheme |
Pre-tax benefit |
| Union dues |
Membership |
| Private healthcare |
If via employer |
| Season ticket loan |
Repayment |
Example Deductions
| Deduction |
Amount |
| PAYE tax |
-£394.67 |
| National Insurance |
-£224.88 |
| Pension (5%) |
-£152.08 |
| Student Loan |
-£63.75 |
| Total deductions |
-£835.38 |
| Net Pay | £2,206.29 |
Understanding Tax Codes
Common Tax Codes
| Code |
Meaning |
| 1257L |
Standard allowance (£12,570) |
| BR |
Basic rate on all earnings |
| D0 |
Higher rate on all |
| 0T |
No allowance |
| K codes |
You owe tax (added to income) |
| NT |
No tax |
Code Numbers
| How It Works |
Example |
| Remove last digit |
1257L |
| Multiply by 10 |
× 10 |
| = Your allowance |
£12,570 |
| Code |
Allowance |
| 1257L |
£12,570 |
| 1100L |
£11,000 |
| 1400L |
£14,000 |
| 500L |
£5,000 |
Code Letters
| Letter |
Meaning |
| L |
Standard allowance |
| M |
Marriage allowance received |
| N |
Marriage allowance transferred |
| T |
Special calculation |
| S |
Scottish taxpayer |
| C |
Welsh taxpayer |
Emergency Codes
| Indicator |
Meaning |
| W1 |
Week 1 basis |
| M1 |
Month 1 basis |
| X |
Emergency tax |
| Effect |
No cumulative calculation |
If Your Code Is Wrong
| Step |
Action |
| 1 |
Check personal tax account |
| 2 |
Contact HMRC |
| 3 |
Phone 0300 200 3300 |
| 4 |
Or use online service |
| 5 |
Employer will adjust |
National Insurance
How It’s Calculated
| Earnings Level |
Rate |
| Up to £242/week |
0% |
| £242 - £967/week |
8% |
| Over £967/week |
2% |
Monthly Thresholds
| Threshold |
Monthly |
| Primary threshold |
£1,048 |
| Upper earnings limit |
£4,189 |
Calculation Example
| On £3,000 Gross |
Calculation |
| Below £1,048 |
£0 NI |
| £1,048 to £3,000 |
£1,952 × 8% |
| NI due |
£156.16 |
Pension Contributions
Common Setups
| Scheme |
Employee |
Employer |
| Auto-enrolment minimum |
5% |
3% |
| Enhanced |
5-10% |
3-10% |
| Public sector |
Varies |
Varies |
Salary Sacrifice
| Type |
Tax Treatment |
| Relief at source |
Gross deducted, tax relief added |
| Salary sacrifice |
Pre-tax, NI saved too |
| Net pay |
Pre-tax |
Example
| £3,000 Gross |
5% Pension |
| Pension deduction |
£150 |
| Taxable pay |
£2,850 |
| Tax saving |
£30 (at 20%) |
Student Loan
Thresholds (Monthly)
| Plan |
Threshold |
Rate |
| Plan 1 |
£2,082 |
9% |
| Plan 2 |
£2,274 |
9% |
| Plan 4 |
£2,616 |
9% |
| Plan 5 |
£2,083 |
9% |
| Postgrad |
£1,750 |
6% |
Calculation Example
| Plan 2, £3,000 Gross |
Calculation |
| Earnings over threshold |
£3,000 - £2,274 = £726 |
| Student loan (9%) |
£726 × 9% = £65.34 |
Year-to-Date Totals
What They Show
| YTD Figure |
Meaning |
| Gross pay YTD |
Total earned this tax year |
| Tax paid YTD |
Total tax paid |
| NI paid YTD |
Total NI paid |
| Pension YTD |
Total contributions |
Why Check YTD
| Reason |
Benefit |
| Compare to P60 |
At year end |
| Track earnings |
Against tax bands |
| Spot errors |
Cumulative shows issues |
| Plan |
Against thresholds |
Common Errors to Watch
What Can Go Wrong
| Error Type |
How to Spot |
| Wrong tax code |
Check letter/number |
| Missing allowance |
Too much tax |
| Wrong hours |
Check against records |
| Missing bonus |
Not on payslip |
| Double deduction |
Check pension, etc |
What to Do
| If Error |
Action |
| Payroll error |
Contact HR/payroll |
| Tax code wrong |
Contact HMRC |
| Keep records |
For queries |
| Check next slip |
For correction |
Summary Checklist
| Check |
On Every Payslip |
| ☐ Tax code correct |
|
| ☐ Gross pay right |
|
| ☐ Hours accurate |
|
| ☐ Allowances applied |
|
| ☐ Deductions expected |
|
| ☐ YTD figures sensible |
|
| ☐ Net pay to bank |
|
| Key Terms |
|
| Gross |
Before deductions |
| Net |
Take-home pay |
| PAYE |
Pay As You Earn (tax) |
| NI |
National Insurance |
| YTD |
Year to date |