Understanding Your UK Payslip: Every Line Explained
Your payslip is a legal document, not just a payment notice. Every figure on it has a specific meaning — and knowing how to read each line lets you catch errors, verify your tax code, track your deductions, and understand exactly what you are owed each pay period.
What your payslip must show by law
UK employment law requires every employer to provide a payslip on or before each payday. The right applies to employees and — since April 2019 — to workers too, which includes those on zero-hours contracts, agency workers, and casual staff. It cannot be waived by contract or agreement. The payslip can be paper or digital, but it must be accessible to you on or before the date you are paid.
The Employment Rights Act 1996 sets out the minimum required content. At a minimum, every payslip must clearly show all of the following:
- Gross pay — total earnings before any deductions
- Each deduction, with its reason — income tax, National Insurance, pension, and any other deductions listed individually
- Net pay — the final amount paid into your bank account
- Hours worked — required since April 2019 for workers paid by the hour; must show the number of hours for which the payment is made
Employers may also include additional information — pay period, tax code, National Insurance category letter, year-to-date figures — and most do. None of these are legally required, but all are useful. If your payslip is missing any of the mandatory items, raise it with your employer and, if unresolved, contact ACAS on 0300 123 1100.
Payslip rights are governed by the Employment Rights Act 1996, as amended. HMRC sets the rules for PAYE deductions. The right to a payslip is enforced by Employment Tribunals — claims can be brought within three months of the breach.
Gross pay: what it includes
Gross pay is the starting point for every payslip calculation. It is your total earnings from all sources in that pay period before a single deduction is applied. Both income tax and National Insurance are calculated from this figure, which makes it the most significant number on your payslip even though it is not what you receive.
Your gross pay may include several components depending on your role and contract:
| Component | What it is | Taxable? |
|---|---|---|
| Basic salary | Your contractual base pay for standard hours | Yes |
| Overtime | Additional pay for hours worked beyond your contracted hours | Yes |
| Bonus / commission | Performance-related or sales-based payments | Yes |
| Shift allowance | Additional pay for unsociable hours or shift patterns | Yes |
| Statutory Sick Pay (SSP) | £118.75/week (2025/26) if you qualify; paid by employer through PAYE | Yes |
| Statutory Maternity / Paternity Pay | Government-set rate paid via employer payroll | Yes |
| Tips (via employer) | Gratuities paid through payroll — not those given directly by customers | Yes |
| Benefits in kind | Company car, private medical insurance — taxable value added to gross | Yes |
Source: HMRC — GOV.UK expenses and benefits
Deductions: income tax, National Insurance, and pension
Every deduction on your payslip must be itemised — your employer cannot bundle them together or describe them vaguely. The three standard deductions for most employees are income tax (collected through PAYE), National Insurance (Class 1 employee contributions), and pension (if you are enrolled in a workplace scheme). Each works differently.
Income tax
Your income tax deduction is calculated by HMRC based on your tax code and applied cumulatively across the tax year (6 April to 5 April). The cumulative method means your employer looks at your total earnings and total tax paid so far this year, not just this month's figures. If you were overtaxed in July, you should automatically be undertaxed in August to compensate. The standard tax code for 2025/26 and 2026/27 is 1257L, reflecting the Personal Allowance of £12,570.
National Insurance
Employee National Insurance (Class 1) is deducted from earnings between the Primary Threshold (£12,570/year) and the Upper Earnings Limit (£50,270/year) at 8%, and at 2% above that. Unlike income tax, NI is calculated per pay period, not cumulatively — there is no end-of-year correction if you overpay in one month due to a one-off bonus. Your NI category letter appears on your payslip; most employees are category A. For a full breakdown of what National Insurance funds and how to apply for your NI number, see the Pay & Tax in the UK guide.
Pension contributions
If you are enrolled in a workplace pension under auto-enrolment rules, your contribution is deducted before or after tax depending on which scheme your employer uses. The minimum employee contribution under auto-enrolment is 5% of qualifying earnings (between £6,240 and £50,270/year for 2025/26), with a minimum employer contribution of 3%. Some employers contribute more. Your payslip should show both your own contribution and the employer's matching contribution — the employer's share does not reduce your net pay but it is worth noting as part of your overall remuneration.
Pension contributions are handled in two ways. Under a net pay arrangement, your contribution is deducted before tax, which reduces your taxable income immediately. Under relief at source, the deduction is taken after tax and HMRC adds basic-rate tax relief directly into your pension pot. The method affects how your gross-to-net calculation appears on your payslip — both are valid.
A worked gross-to-net example
The following example shows how a £3,500 gross monthly salary breaks down for a standard employee on tax code 1257L with a 5% pension contribution under a net pay arrangement. All figures use 2025/26 and 2026/27 rates, which are unchanged.
Example payslip — monthly, tax code 1257L
Figures are illustrative. Income tax calculated on pensionable-pay-reduced gross using standard 2025/26 PAYE rates. Actual figures depend on your tax code, NI category, and pension scheme type. Use HMRC's tax calculator at GOV.UK for your specific situation.
Your tax code on your payslip
Your tax code is one of the most important items on your payslip because it controls how much income tax your employer deducts. The wrong tax code means you pay too much or too little tax — and while HMRC usually corrects underpayments by adjusting future tax codes, overpayments require you to actively claim a refund.
The code 1257L is correct for most employees with one job, no untaxed income, and no benefits in kind. Common reasons your code might differ include having a second job (which usually triggers a BR or D0 code), receiving taxable benefits from your employer, having unpaid tax from a previous year carried forward, or starting a new job without a P45 (which triggers an emergency code).
If you start a new job without providing a P45, your employer will place you on an emergency tax code — usually 1257L W1 or 1257L M1. These codes calculate tax on each pay period independently rather than cumulatively, which can mean you pay too much in your first month. Once HMRC receives your payroll information and updates your code, your employer should apply any correction automatically. Check your first payslip carefully and contact HMRC if the code does not update within a few weeks.
National Insurance category letter
Your National Insurance category letter tells your employer which rate of Class 1 NI applies to you. It appears alongside your NI number on your payslip. Most employees are category A — the standard rate for employees who do not fall into any special group. Other categories cover specific situations.
| Category | Who it applies to |
|---|---|
| A | Most employees — standard rate |
| B | Married women and widows with a valid election to pay reduced NI (valid elections are now very rare) |
| C | Employees over State Pension age — no employee NI deducted |
| F, I, L, S | Freeport employees at specific sites — reduced rates apply |
| H | Apprentices under 25 — employer NI exempt up to the Upper Earnings Limit |
| M | Employees under 21 — employer NI exempt up to the Upper Earnings Limit |
| Z | Employees under 21 who defer NI due to having multiple jobs |
Source: HMRC — GOV.UK NI category letters
If your payslip shows a category letter you do not recognise or believe to be incorrect, contact your payroll department first. An incorrect NI category affects how much both you and your employer contribute — it is not just an administrative label.
Year-to-date figures
Most payslips include year-to-date (YTD) columns alongside the current period figures. These show cumulative totals from 6 April to the current pay date for gross pay, income tax deducted, National Insurance deducted, and pension contributions. They are one of the most useful tools for self-checking your PAYE position without waiting for your P60.
Because income tax is calculated cumulatively, your YTD tax figure tells you whether HMRC's records align with what your employer has collected. If you have changed jobs, received a bonus, or had your tax code changed during the year, comparing your YTD figures to what they should be based on your earnings is the fastest way to identify whether you are heading for an underpayment or overpayment at year end.
If your YTD tax figure looks higher than expected, do not wait for your P60. Log into your Personal Tax Account at GOV.UK to check your current tax code and your cumulative position. HMRC can issue a revised code immediately if an error is confirmed.
P45 and P60: the documents that accompany your payslip record
Your monthly payslips are the running record of your pay. Two additional documents — the P45 and P60 — provide snapshots at specific points in your employment history and carry significant practical weight outside of payroll.
P45 — when you leave a job
Your employer must issue a P45 on your last day or shortly after. It shows your tax code at leaving, your total pay and tax deducted in the current tax year up to your leaving date, and is divided into three parts. Part 1 goes to HMRC automatically; Parts 2 and 3 are for you to give to your new employer. Handing over your P45 promptly prevents your new employer placing you on an emergency tax code and overtaxing your first month's salary. If your employer fails to issue a P45, contact HMRC — your employer is legally required to provide it.
P60 — end of every tax year
Your employer must give you a P60 by 31 May following the end of each tax year. It summarises your total pay and all deductions for the full year and is one of the most requested documents in financial and administrative contexts — mortgage applications, Self Assessment returns, tax credit claims, benefit applications, and some visa applications all commonly require it. Keep every P60: HMRC recommends retaining them for at least 22 months from the end of the tax year they cover, and for self-employed individuals or those with complex tax affairs, longer retention is advisable.
How to spot and challenge payslip errors
Payslip errors are more common than most people realise — HMRC estimates that a significant proportion of PAYE records contain at least one discrepancy at some point during an employee's working life. The most frequent issues involve incorrect tax codes, wrong NI categories, missing overtime or bonus payments, unauthorised deductions, and miscalculated statutory payments.
The process for challenging an error depends on what type it is. Tax code errors involve HMRC directly; pay calculation errors involve your employer; unauthorised deductions are a legal matter governed by the Employment Rights Act.
| Error type | Who to contact | What to do |
|---|---|---|
| Wrong tax code | HMRC | Call 0300 200 3300 or update via Personal Tax Account. Your employer cannot change it without HMRC instruction. |
| Wrong NI category letter | Payroll department | Ask payroll to review — they will liaise with HMRC if correction is needed. |
| Missing overtime or bonus | Payroll department | Raise in writing with payroll; most corrections appear in the next pay run. |
| Unauthorised deduction | Employer, then Employment Tribunal | Employer must have written authorisation for any deduction beyond statutory ones. No authorisation means no right to deduct. |
| Underpayment of wages | Employer, then HMRC / ACAS | Underpayment is illegal regardless of cause. HMRC enforces minimum wage; ACAS (0300 123 1100) handles pay disputes. |
| Incorrect statutory pay (SSP, SMP) | Payroll department, then HMRC | Statutory payment rates are set by law — your employer has no discretion. If you are receiving less than the statutory minimum, contact HMRC. |
Under the Employment Rights Act 1996, your employer may only make deductions from your pay if they are legally required (tax, NI), expressly authorised by your contract, or you have given prior written consent. If money is missing from your pay without any of these applying, you have the right to bring a claim to an Employment Tribunal. There is a three-month time limit from the date of the deduction, so do not delay raising the issue.
Why keeping your payslips matters
Payslips are more than a monthly confirmation of pay. They are financial records with real-world uses that extend well beyond checking your wages arrived correctly. Mortgage lenders typically ask for three to six months of payslips to verify income. Letting agents require them for rental applications. Benefit and tax credit applications use them as proof of earnings. Some visa categories — including the Skilled Worker visa and its dependant routes — require payslips as evidence of sponsorship compliance. Keeping every payslip, whether digitally or on paper, protects you in all of these situations.
Understanding your payslip also makes you harder to underpay. Errors in PAYE calculations, incorrect tax codes, and missing overtime payments are genuine and recurring problems — not edge cases. The employees who catch these errors quickly are the ones who understand what each line means and check it against what they expect. The figures on a payslip are not fixed facts handed down from above; they are outputs of calculations that can go wrong, and you are the person best placed to notice when they do.
If anything on your payslip is unclear, your payroll department is the right first contact. Most payroll teams will explain any line item on request. For tax code questions, your Personal Tax Account at GOV.UK gives you a real-time view of what HMRC holds on record, and updating it takes minutes. The system works well when everyone plays their part — and your part starts with reading the document.
Frequently asked questions
UK law requires every payslip to show: gross pay (earnings before deductions), the amount and reason for each deduction (income tax, National Insurance, pension contributions), and net pay (the amount paid into your bank account). Since April 2019, payslips for workers paid by the hour must also show the number of hours paid. Employers must provide the payslip on or before payday — it can be paper or digital.
Gross pay is your total earnings before any deductions are applied. It includes your basic salary or hourly wages, plus any additional elements such as overtime, bonuses, commission, shift allowances, or statutory payments. Income tax and National Insurance are both calculated on your gross pay, which is why the figure matters beyond just what you take home.
Gross pay is what you earn before deductions. Net pay is what you actually receive after income tax, National Insurance, pension contributions, and any other deductions have been taken. The gap between gross and net depends on your tax code, NI category, pension contribution rate, and any voluntary deductions such as cycle-to-work schemes or season ticket loans.
Your tax code tells your employer how much of your income is tax-free each year. The most common code is 1257L, meaning £12,570 of tax-free income — the standard Personal Allowance for 2025/26 and 2026/27. If your code is wrong, HMRC will either over- or under-collect tax from you. Contact HMRC on 0300 200 3300 or through your Personal Tax Account at GOV.UK to correct it.
A P60 is an annual summary of your total pay and all deductions for the tax year, issued by your employer after 5 April each year. It shows your total gross earnings, the total income tax and National Insurance deducted, your final tax code for the year, and your National Insurance number. You need your P60 for mortgage applications, tax credit claims, and Self Assessment returns. Keep every P60 — HMRC recommends retaining them for at least 22 months from the end of the tax year.
A P45 is the document your employer must give you when you leave a job. It shows your tax code at leaving, your total pay and tax deducted in the current tax year up to your leaving date, and is split into three parts — Part 1 goes to HMRC, Parts 2 and 3 go to you and your new employer. Give Parts 2 and 3 to your new employer to avoid being placed on an emergency tax code. If your employer does not provide a P45, contact HMRC.
Year-to-date (YTD) figures show the cumulative total of your earnings and deductions from 6 April (the start of the UK tax year) to the current pay date. They allow you to track how much income tax and National Insurance you have paid in total so far this year, and help confirm that PAYE is running correctly — the cumulative calculation means overpayments in one month are automatically corrected in the next.
If you spot an error on your payslip — wrong tax code, incorrect NI deduction, missing overtime, or a deduction you did not authorise — raise it with your payroll department first. Most errors are corrected in the next pay run. If the error involves your tax code, contact HMRC directly on 0300 200 3300 or through your Personal Tax Account. Your employer cannot change your tax code without HMRC instruction. If you have been underpaid, your employer must correct this — underpayment of wages is a legal breach regardless of whether the error was intentional.
Yes. Since April 2019, all workers — including those on zero-hours contracts, agency workers, and casual workers — are entitled to a payslip. If you are paid by the hour, your payslip must also show the number of hours being paid for. The right to a payslip cannot be waived by contract.
Payslip legislation is governed by the Employment Rights Act 1996. PAYE rates and thresholds are set by HMRC and reflect the 2025/26 and 2026/27 tax years. Statutory payment rates (SSP, SMP, SPP) are subject to annual review. Auto-enrolment contribution minimums are set by The Pensions Regulator. This article is for general information only and does not constitute legal, financial, or employment advice. For advice specific to your circumstances, consult a qualified employment lawyer, ACAS, or a regulated financial adviser. ACAS helpline: 0300 123 1100. HMRC income tax helpline: 0300 200 3300.
UK employment and pay news
Wage updates, HMRC changes, and employment law — updated regularly.