How to Read a Payslip — UK Guide
Your payslip is a legal document that your employer must provide every time you're paid. It shows exactly how your gross pay has been calculated and what's been deducted to arrive at your take-home amount.
What Must Appear on a Payslip?
Under UK law, a payslip must include:
- Gross amount of wages or salary
- Variable deductions (e.g., tax, NI) with amounts
- Fixed deductions with a total (e.g., union fees)
- Net wages or salary actually paid
- For hourly paid workers: hours worked and hourly rate
Key Payslip Sections Explained
Basic Pay / Gross Pay
Your total earnings for the period before any deductions. Includes base salary plus overtime, bonuses, or allowances.
Tax Code
e.g., 1257L — tells your employer your tax-free allowance. The number × 10 = your annual allowance. Check it's correct on every payslip. See our Tax Codes guide.
Income Tax
The PAYE tax deducted based on your tax code and the amount you've earned so far this year. Typically 20% (basic rate) or 40% (higher rate) on earnings above your personal allowance.
National Insurance (NI)
Employee NI deducted at 8% on earnings between £1,048–£4,189/month (2025/26), 2% above. Separate from income tax and funds the State Pension and NHS.
Pension Contribution
Your contribution to your workplace pension. May be shown as a salary sacrifice deduction (pre-tax) or a regular deduction. Reduces your taxable income if via salary sacrifice.
Student Loan Deduction
If applicable — repaid at 9% on earnings above your plan's threshold. Plan 1: £24,990. Plan 2: £27,295. Plan 4: £31,395. Plan 5: £25,000.
Net Pay
The amount paid into your bank account after all deductions. This is your take-home pay for the period.
YTD (Year to Date)
Cumulative totals from 6 April. Useful for checking your total tax and NI paid so far in the tax year. Used at year end by HMRC to reconcile your tax position.
Common Payslip Issues to Watch For
- Wrong tax code — could cause over- or under-deduction of tax all year
- Emergency code (BR, 0T) — you may be paying too much tax; contact HMRC
- No pension deduction despite being auto-enrolled — check with your employer
- Unexpected student loan deduction — check your loan plan and whether you've passed the threshold
- Gross pay doesn't match expected salary — check if salary sacrifice is reducing your gross