Why this guide exists
Most people look at one number on their payslip. It is the wrong number to look at on its own, and the rest of the document is treated as noise generated by a system nobody expects to be wrong.
It is wrong more often than people assume. Not usually through fraud, and not usually through an error in the arithmetic — payroll software does the sums correctly. It goes wrong because the software was told something incorrect: a tax code that has not caught up with a change, a student loan plan set to the wrong number, a pension arrangement that means your taxable pay is not what you think it is, or a starter declaration that was filled in wrongly on your first day and has been quietly costing you money since.
Nobody else is going to notice. HMRC will usually catch a tax discrepancy eventually, though "eventually" can mean the following summer and the correction can arrive as a bill. Your employer's payroll department processes hundreds of people and works from the information it holds. The only person with both the motive and the information to check your payslip is you.
This guide explains what each part of a UK payslip means, how the deductions are worked out and in what order, why the same salary produces different take-home pay in different months, and how to check the main figures for yourself. It assumes no knowledge of tax or payroll. Where a term is unavoidable it is explained the first time it appears.
What a payslip must legally contain
Almost everyone classed as a worker or an employee has a legal right to an itemised pay statement, on or before payday. The right comes from the Employment Rights Act 1996, and the statement must show:
- gross pay, before anything is taken off
- the amounts of any deductions that vary, and what each one is for
- the amount of any fixed deductions, either itemised or as a total with a separate written statement of the breakdown
- net pay — the amount actually being paid to you
- where payment is split across more than one method or account, the amount and method of each part
- the number of hours being paid for, where pay varies according to hours worked
That last item is newer than the rest and is the one most useful to people on variable hours. It was added in April 2019, and it means an employer cannot pay a lump sum for a month of irregular shifts without showing how many hours it represents.
There is no legal requirement to show your tax code, your National Insurance number, your year-to-date totals, your holiday entitlement or your employer's pension contribution. Most payslips show some of these because payroll software produces them by default and because they are useful, not because the law compels it. If yours shows very little, that may be lawful and still worth asking about — you cannot check what you cannot see.
Payslips may be paper or electronic. An employer can require you to access yours through an online portal, though you must be able to get at it.
The anatomy of a payslip
Layouts vary enormously between payroll systems, but almost every payslip contains the same five groups of information. Finding them on yours is the first step.
1. Identifying information
Your name, payroll or employee number, National Insurance number, the pay date, and the tax period. The tax period is worth understanding: the tax year runs from 6 April to 5 April, so month 1 is April and month 12 is March. A payslip marked "month 9" is December. Weekly payrolls run weeks 1 to 52.
2. Payments
Everything being paid to you this period, listed separately: basic pay, overtime, bonus, commission, holiday pay, statutory payments such as sick or maternity pay, expenses reimbursed through payroll. Added together these give gross pay.
3. Deductions
Everything being taken off. Typically income tax, National Insurance, pension contributions, student loan repayments, and anything else you have agreed to such as a cycle to work scheme, a season ticket loan or union subscriptions. Some employers show attachment of earnings orders here, which are court-ordered deductions.
4. Year-to-date totals
Running totals since 6 April: gross pay, tax paid, National Insurance paid, pension contributions. These are the most useful figures on the payslip for checking anything, and the ones people ignore most consistently. A single month tells you very little. The year-to-date figures tell you whether the year as a whole is on track.
5. Net pay
Gross pay minus total deductions. The figure that reaches your bank account, and the one everybody looks at first.
Keep every payslip, and keep your P60 at the end of each tax year. A P60 is the annual summary of your pay and tax from one employer. If a dispute ever arises — with HMRC, with a former employer, with a mortgage lender, with the Student Loans Company — the person with the documents is in a much stronger position than the person relying on memory. Electronic copies are fine, but download them: access to an employer's portal tends to disappear shortly after you leave.
Your tax code, and how to read it
The tax code is the most consequential thing on your payslip and the least understood. It is HMRC's instruction to your employer about how much of your pay to treat as tax-free. Get it wrong and everything downstream is wrong.
The number
The number is your tax-free allowance for the year, divided by ten. A code of 1257L means an allowance of £12,570. Payroll spreads that allowance evenly across the year, so a monthly-paid employee on that code gets one twelfth of it free of tax each month.
The number changes when HMRC adjusts your allowance — because you claimed an expense, because you have a taxable benefit such as a company car or private medical insurance, because you owe tax from an earlier year, or because you receive taxable income that has no tax deducted at source. A code lower than the standard one usually means something is being taken off your allowance. A code higher than standard usually means something is being added.
The letters
| Letter | What it means |
|---|---|
| L | The standard personal allowance. Most people. |
| M | You receive a transfer of part of your partner's allowance under the Marriage Allowance. |
| N | You have transferred part of your allowance to your partner. |
| T | Your code includes other calculations HMRC needs to review. |
| K | Deductions exceed your allowance, so an amount is added to your taxable pay rather than removed. Usually benefits in kind or tax owed from a previous year. |
| BR | All of this income is taxed at the basic rate, with no allowance. Normal for a second job. |
| D0, D1 | All of this income is taxed at the higher or additional rate. Usually a second income for a higher earner. |
| 0T | No allowance at all, and tax at the appropriate rates. Often a sign that HMRC has no information about you. |
| NT | No tax to be deducted. Rare, and specific. |
A code beginning S means Scottish rates apply; a code beginning C means Welsh rates. These follow from where you live, not where you work, and it is your responsibility to keep HMRC informed of your address.
The suffix that catches people out
A code ending W1, M1 or X is a non-cumulative or emergency code, and it behaves quite differently from a normal one. This is explained in the section below, because it is the single most common reason a payslip looks wrong.
If a new job starts on 0T or BR because the starter paperwork was not completed, you are paying tax on income that should have been covered by your allowance. The money is not lost — it comes back when the code is corrected, or after the tax year ends — but it can be months. Check the code on your first payslip in any new job, not the twelfth.
Why one month can look completely wrong
This section explains more apparently baffling payslips than any other, and the mechanism behind it is genuinely elegant once you see it.
PAYE is cumulative
Income tax under PAYE — Pay As You Earn — is not calculated month by month in isolation. Each payday, payroll works out how much tax you should have paid on everything you have earned since 6 April, compares it with how much you have actually paid so far, and deducts the difference.
That design is what makes PAYE work as well as it does. It is self-correcting: if too much was deducted in an earlier month, later months deduct less, and by the end of the year the total comes right without anyone intervening.
It also produces results that look wrong in isolation.
- A bonus month. A large payment in one month can push your year-to-date total into a higher band, and the tax deducted that month can look punitive — sometimes far more than the marginal rate on the bonus itself. In most cases the following months correct it as the year-to-date figures settle down. What matters is the annual total, not that month's.
- Starting work part way through a year. You have accumulated unused allowance since 6 April, so your first payslip may show very little tax or none at all. That is correct, not an error to be enjoyed quietly and then repaid.
- A month with no pay, or reduced pay. Unpaid leave or a period of statutory sick pay can produce a tax refund through the payroll, because you have now paid more than the year-to-date position requires.
Non-cumulative codes break the self-correction
A code ending W1, M1 or X tells payroll to ignore the year to date entirely and treat every period as though it were the first. One twelfth of the allowance, one twelfth of each band, every month, with no reference to what came before.
These codes are issued when HMRC does not have enough information to be confident about your year-to-date position — commonly on a new job, or after a change HMRC cannot reconcile. They are protective rather than punitive: they stop a large under- or over-deduction while things are sorted out. But because they cannot self-correct, any error simply persists until the code is put right.
National Insurance for most employees is not cumulative. It is worked out separately on each pay period, and there is no year-end reconciliation through payroll. That has a real consequence: someone whose pay is uneven — a low basic with a large annual bonus, or irregular shifts — pays more National Insurance over the year than someone earning the same annual total in twelve equal instalments, because the bonus month pushes earnings above the point where the rate drops. This is not an error and there is no refund mechanism for it. It is simply how the two systems differ.
The deductions, and the order they happen in
Order matters enormously, because each deduction is calculated on a base that earlier steps may have changed. Getting the order wrong is why hand-checked figures often fail to match.
Income tax
Calculated on your taxable pay, which is gross pay less anything that reduces it before tax — most commonly a pension contribution under a net pay arrangement, or a salary sacrifice. The bands and rates are set annually and differ between England and Northern Ireland, Scotland, and Wales. Scotland has had a distinctly different band structure for some years, with more bands than the rest of the UK.
National Insurance
Calculated on your gross earnings for the period, with a threshold below which nothing is paid, a main rate above it, and a lower rate above an upper limit. The structure is worth knowing even though the figures move: National Insurance is charged at a lower rate on high earnings than on middle earnings, which surprises people who assume all deductions rise with income.
Your category letter appears on many payslips. Most employees are category A. Different letters apply to certain ages, to some married women on historic elections, and to specific employment zones.
Employer National Insurance may also appear on your payslip. It is not deducted from you — it is a cost your employer pays on top of your salary. It is shown for information, and it is why employers care about salary sacrifice arrangements.
Pension
Three different arrangements exist and they produce visibly different payslips for identical gross pay. This is covered in its own section below, because it is where most confusion about "why is my taxable pay not my gross pay" comes from.
Student loan and postgraduate loan
Deducted as a percentage of earnings above a threshold, assessed per pay period rather than annually. This catches people out: a single month above the monthly threshold triggers a deduction even if your annual income ends up below the annual threshold. You can ask the Student Loans Company for a refund in that situation, and it is not automatic.
Five plans currently run alongside each other, and they have different thresholds and terms. Which one you are on depends on where and when you studied, not on what you would prefer:
- Plan 1 — English and Welsh students who started before September 2012, and Northern Ireland students.
- Plan 2 — English students who started between September 2012 and July 2023, and Welsh students since 2012.
- Plan 4 — Scottish students.
- Plan 5 — English students who started on or after 1 August 2023. Repayments began in April 2026, and it has the lowest threshold of any undergraduate plan and a longer repayment term.
- Postgraduate Loan — master's and doctoral loans. This is the only one that can be deducted at the same time as another plan.
Where an employer does not know which plan a new employee is on, Plan 5 is now the default plan type applied. Because Plan 5 has the lowest threshold, an incorrect default takes more money than the right plan would for many people. If you have a student loan, check that the plan number shown on your payslip matches the one you are actually on — and if you have finished repaying, check that deductions have stopped, because they do not always stop by themselves.
Other deductions
Season ticket loans, cycle to work, share schemes, union subscriptions, charitable giving through payroll, and attachment of earnings orders. Most require your agreement in advance. Attachment orders do not, because they are made by a court.
The three pension arrangements, and why they look different
Two people on identical salaries paying identical pension contributions can have visibly different payslips and different take-home pay, purely because of which arrangement their employer uses. Almost nobody is told which one they are on.
Net pay arrangement
Your contribution comes out of your gross pay before income tax is calculated. Your taxable pay is therefore lower than your gross pay, and you receive tax relief at your marginal rate automatically, with nothing to claim.
On the payslip, look for a taxable pay figure that is lower than gross pay by exactly the pension contribution.
Relief at source
Your contribution comes out of your pay after tax, and the pension provider then claims basic rate relief from HMRC and adds it to your pot. If you pay tax at a higher rate, the extra relief is not automatic — you claim it through a tax return or by contacting HMRC. A great many higher-rate taxpayers never do.
On the payslip, taxable pay equals gross pay, and the pension deduction sits alongside the tax deduction rather than before it.
Salary sacrifice
You formally give up part of your contractual salary and your employer pays that amount into the pension instead. Your gross pay itself is lower. Because National Insurance is calculated on gross pay, you save National Insurance as well as income tax, and so does your employer — which is why employers offer it.
On the payslip, the gross figure is lower than the salary in your contract, and there may be no pension deduction line at all, because the money never counted as your pay.
Salary sacrifice reduces your gross pay, and gross pay is what several other things are assessed on: mortgage affordability, some statutory payments including maternity pay, life cover expressed as a multiple of salary, and in some cases redundancy pay. The National Insurance saving is real and worth having for most people, and the interactions are worth understanding before signing up rather than afterwards. If you are near a threshold that matters — for a benefit, for childcare support, for the point where the personal allowance starts being withdrawn — the sums are worth doing properly, and that is a conversation with a regulated adviser rather than with a website.
How to check your payslip in ten minutes
You do not need to reproduce the payroll calculation. You need to check the inputs, because that is where the errors are. Work through these in order.
1. Check the tax code
Compare the code on the payslip with the code on your most recent coding notice from HMRC, and with the code in your HMRC personal tax account. If they differ, the payslip is running on out-of-date instructions. If the code ends W1, M1 or X and you have been in the job for more than a couple of months, that is worth chasing.
2. Check the gross pay against what you expected
For salaried work, one twelfth of the annual salary, plus anything extra. For hourly work, multiply the hours shown by the rate — and check the hours themselves against your own record, because this is where variable-hours pay most often goes wrong. If you are paid at or near the minimum wage, check that the rate is right for your age band and that unpaid time such as travel between assignments has been treated correctly.
3. Check the student loan plan number
One digit, frequently wrong, and it changes how much comes off. If you have no student loan, check that no deduction is being taken.
4. Check the pension contribution and the arrangement
Does the percentage match what you agreed? Is your taxable pay lower than gross by the contribution, or the same as gross? That tells you which arrangement you are on, and therefore whether you have higher-rate relief to claim.
5. Check the year-to-date figures move sensibly
Each month's year-to-date total should be last month's plus this month's. A jump or a reset part way through a year needs an explanation. A reset is normal in April and abnormal in November.
6. Check net pay against your bank statement
Obvious, rarely done, and it catches the rare but real problem of a payslip that does not match the payment.
The full check is worth doing in April when codes and rates change, in the month after any change to your pay or benefits, and on the first payslip of any new job. The rest of the time, glancing at the tax code and the net figure takes ten seconds and would catch most of what goes wrong.
What to do when something is wrong
Where you go depends on what kind of error it is, and going to the wrong place wastes weeks.
Errors in pay itself
Hours, rate, overtime, missing bonus, holiday pay: these are your employer's, and specifically payroll's. Raise it in writing, keep a copy, and set out the figures you expected and the figures you received. Most are resolved in a single pay run.
If an employer has underpaid you and will not put it right, that is an unlawful deduction from wages, and there is a route to an employment tribunal with strict time limits — generally three months less one day from the deduction. ACAS provides free advice and the early conciliation service that must be used before a claim.
Errors in the tax code
These are HMRC's, not your employer's. An employer must apply the code it has been given and cannot simply change it because you have asked. Contact HMRC directly, or use your personal tax account, which is the fastest route and lets you see what HMRC believes about your income and benefits. Correcting the underlying belief is what changes the code.
Errors in student loan deductions
Wrong plan type: tell your employer, since the plan is held in their payroll record. Deductions continuing after the loan is repaid, or deductions taken in a year when your total income was below the annual threshold: contact the Student Loans Company, which handles refunds.
Overpayments by your employer
If your employer has paid you too much, they are generally entitled to recover it, including by deduction from future pay. That does not mean any repayment schedule they propose is reasonable, particularly for a large sum accumulated over a long period through the employer's own error. It is negotiable, and it is worth negotiating in writing.
Where to get free help
Citizens Advice for general employment and money questions. ACAS for employment rights and disputes. The Low Incomes Tax Reform Group publishes some of the clearest free guidance on PAYE anywhere, aimed at people rather than at accountants. All three are free and none of them is selling anything.
What is changing
Two changes are worth knowing about, because both will alter what appears on payslips over the next couple of years.
Benefits in kind moving onto the payslip
Taxable benefits such as company cars and private medical insurance have traditionally been reported once a year on a form P11D, with the tax collected by adjusting your tax code. That is being replaced by reporting benefits through the payroll in real time, so the tax comes off as you go rather than through a coding adjustment.
HMRC has confirmed a phased introduction from April 2027, beginning with the most common benefits — company cars and fuel, vans and van fuel, and medical benefits — with wider coverage following. The date has moved more than once, having originally been set for April 2026, so check the current position before relying on it.
What it will mean in practice: if you have a taxable benefit, expect to see it as a line on your payslip rather than as a reduction in your tax code, and expect your tax code to go up as the benefit is removed from it. Your overall tax will be similar; its timing and its visibility will change.
Frozen thresholds
Several tax and repayment thresholds have been held at fixed cash amounts for extended periods rather than rising with inflation. The practical effect is gradual: as pay rises, more of it falls above thresholds that have not moved, so the proportion of income taken in tax and repayments increases without any rate changing. This is sometimes called fiscal drag. It is worth understanding as an explanation for why take-home pay can fail to keep up with a pay rise, though how much any individual is affected depends entirely on their own circumstances.
This guide deliberately explains the mechanics rather than listing the current rates and thresholds, because those change at the start of each tax year and a page full of last year's numbers is worse than no numbers at all. For current figures, use GOV.UK, which is the authoritative source and is updated on the day changes take effect.
Frequently asked questions
Why has my tax gone up when my pay has not changed?
The most common causes are a change of tax code, the loss or gain of a taxable benefit, or a cumulative correction catching up with an earlier under-deduction. Compare the tax code on this payslip with the previous one — if it has changed, that is almost certainly the reason, and HMRC will have sent a coding notice explaining why. If the code is the same and the gross pay is the same, check the year-to-date figures for a jump that would explain it.
What is an emergency tax code and how do I get off it?
An emergency code is a non-cumulative code, shown with W1, M1 or X after it. It treats every pay period as though it were the first of the year, ignoring what has gone before, which prevents a large error while HMRC works out your position. You come off it when HMRC has enough information: usually when your P45 from a previous employer is processed, or when you complete the starter checklist correctly, or when you contact HMRC directly. Any overpaid tax is repaid once a cumulative code is applied.
Why was so much tax taken off my bonus?
Because PAYE is cumulative. A large payment pushes your year-to-date earnings up sharply, and the calculation deducts tax as though that rate of earnings continued. In most cases later months deduct correspondingly less and the annual total comes right. National Insurance is different: it is worked out per pay period with no year-end reconciliation, so the extra National Insurance on a bonus month genuinely is not recovered.
What is the difference between gross pay and taxable pay?
Gross pay is everything you have been paid. Taxable pay is what income tax is calculated on, which is gross pay less anything that reduces it before tax — most often a pension contribution under a net pay arrangement. If the two figures differ on your payslip, the difference should exactly equal your pre-tax deductions. If they are the same and you pay into a pension, you are probably on a relief at source arrangement, which may mean you have higher-rate relief to claim.
I have two jobs. Why is one taxed so much more?
Your personal allowance is usually applied to one job, and the second is taxed with no allowance at all, typically on a BR code. Across both jobs the total is usually roughly right. If your main job does not use the whole allowance, you can ask HMRC to split the allowance between them, which stops you overpaying during the year rather than waiting for a refund.
How do I know which student loan plan I am on?
It depends on where and when you studied rather than on any choice. Broadly: before September 2012 in England or Wales, or any Northern Ireland course, is Plan 1; September 2012 to July 2023 in England, or Welsh courses since 2012, is Plan 2; Scottish courses are Plan 4; English courses starting on or after 1 August 2023 are Plan 5. Postgraduate loans are separate and can run alongside another plan. Your online student loan account confirms it, and it is worth confirming, because Plan 5 is now the default where an employer does not know.
Can my employer deduct money without telling me?
Only in limited circumstances. Deductions generally require either a statutory requirement — tax, National Insurance, a court order — a term in your contract, or your prior written agreement. Recovery of a genuine overpayment of wages is one of the specific exceptions. Any deduction that varies must be itemised on your payslip, so an unexplained line is a fair question to ask about.
What is the employer National Insurance figure on my payslip?
A cost your employer pays to HMRC on top of your wages. It is not deducted from you and it does not reduce your take-home pay. It is shown for transparency on some payslips. It is also the reason employers are keen on salary sacrifice arrangements, since those reduce the employer's National Insurance as well as yours.
Why is my National Insurance a lower percentage than my colleague's?
Most likely because you earn more. Unlike income tax, the National Insurance rate falls above an upper earnings limit, so a higher earner pays a smaller proportion of their total pay than someone in the middle. Category letters also vary with age and circumstances, and the letter on your payslip determines which rates apply.
Should I check my payslip if I am on a fixed salary and nothing changes?
Yes, though briefly. The things that go wrong on a stable salary are tax code changes, benefits being added or removed, pension percentage changes, and student loan deductions starting or failing to stop. All of those appear on the payslip and none of them announces itself. Ten seconds a month, and a proper look each April, is proportionate.
Related tools
References
These organisations publish the guidance behind this page.
- GOV.UK — current rates, thresholds and tax codes, and the authoritative guidance on PAYE — the source to use for any figure
- HMRC personal tax account — check your tax code, what HMRC believes about your income, and report a change
- Low Incomes Tax Reform Group — detailed free guidance on PAYE, tax codes and payslips written for individuals rather than for advisers
- ACAS — employment rights on pay, deductions from wages and how to raise a dispute
- Citizens Advice — free help with pay problems, deductions and disputes with an employer
- Employment Rights Act 1996, section 8 — the statutory right to an itemised pay statement and what it must contain
- Student loan repayment, GOV.UK — the repayment plans, which one applies to you, and how repayments are collected
- Chartered Institute of Payroll Professionals — the professional body for payroll, and a source for how changes are being implemented
External guidance changes. Check the current position at the source before relying on it for a decision that matters.