Understanding Your Payslip

Time to Get Your UK Self-Assessment Tax Return Started


When was the last time that you checked your payslip? Not the kind where you looked over it at a glance, but thoroughly check it and understand what the entries are about. Are you even sure that what you are getting is a detailed payslip?

Most people considers it as nothing more than a piece of paper because what matters most is the money associated with it. What they don’t know is that a payslip includes information that tells them if they are on the right tax code or that they are paid fairly and accurately. So go ahead, take out your payslip and looked over it comprehensively. Who knows? You might have missed some important details.

Your right to a payslip

Unless you work freelance or as an independent contractor, you are entitled to an individual detailed written payslip that must be handed to you on or before you are paid. Payslips can be printed on paper, sent to you through email, or accessible through a website. Casual staff should also expect to receive a payslip before getting paid.

What information your payslip must contain

Your payslip must show your gross pay, variable deductions, fixed deductions, net pay, and amount and method for any part payment. These items are mandatory and employers must provide such information. What they may or may not include, however, are your tax code, National Insurance (NI) number, annual or hourly pay rate, and additional payments, such as tips, bonuses, and overtime pay.

• Gross pay refers to your total pay before tax or NI deductions.
• Variable deductions are any amount that is deducted, which changes from payday to payday, such as tax. There must be information included as to what the deductions are for.
• Fixed deductions are those that don’t change from payday to payday, including union dues. No explanations are necessary as to what the deductions are, but a separate statement must be provided once a year.
• Net pay is, of course, your total amount of take-home pay once all the deductions are taken out.
• Part payment may refer to a separate cash payment with the balance credited to your bank account.

Understanding your payslip

Apart from details about your salary and deductions, your payslip will contain other information that you should know and understand. Some of them may be mandatory, while others are not.

• Personal information that may include your home address.
• Payroll number that companies use to identify you on the payroll. This makes it easier to distinguish you from other employees.
• Date as to when your pay will be credited to your bank account.
• Tax period indicates the month with which the payslip is associated with, such as between 01 April and 12 March if you’re paid monthly.
• Tax code indicates the amount of your tax-free pay, telling your employer when they should start deducting tax.
Note: It is important that you ensure you are on the right tax code as the wrong one could mean you overpay or underpay tax. Check the tax code on your payslip against the one indicated in your tax code notice.
National Insurance number is your personal number within the social security system. You need it to work in the UK and is used to ensure all your contributions like pensions are properly recorded.
• Bonuses, commission, payments, and wages show how much you earned before and after deductions. It may also show calculations of your pay and any extra payments you receive on top of your basic salary.
• Expenses are any expenses owed to you by your employer and paid via payroll. Your employer may provide a separate list of expenses or combine them on your payslip to show which expenses are taxable or non-taxable.
• Deductions are any amount of variable deductions made, including tax and NI.
• Pensions indicate the amount you’re paying towards a workplace pension set up by your company. It will also show the amount your employer contributes to the pension if they’re paying part of their share.
• Student loan, as the name suggests, indicates repayments on a student loan that has been worked out and deducted from your pay. Repayments usually start from the April following your graduation date or after your course ended. HMRC will provide information to your employer as to the right amount to deduct.

Note: Make sure to keep your payslips and P60 forms as proof of repayments in case problems will arise when HMRC tells the Student Loans Company the amount of repayment you’ve already made.

  • Court orders and child maintenance is any amount directly deducted from your pay that a court orders for the maintenance of a child, unpaid fines, debt repayments, and the like. An employer has the option to take an additional administration fee of £1 that must be shown separately on a payslip, complete with a detailed description.
  • Sick pay refers to the Statutory Sick Pay your employer must pay if you meet certain conditions and the company’s sick pay policy. Since it is treated as a salary, tax, NI, and other deductions will be made from it.
  • Maternity, paternity and adoption pay is any amount paid because of Statutory Maternity Pay, Shared Parental Leave, Shared Parental Pay, and Statutory Adoption Pay. Whichever applies, such payment is treated as ordinary earnings that are subject to tax and NI.
  • Workplace benefits are any deductions made towards health insurance, cycle-to-work scheme loans, repayment of season-ticket loans, charitable donations and the like.
  • Other deductions can be payments to trade union subscriptions or something similar.
    Summary of the year to date shows the amount you paid so far in the financial year. It may also include the total amount you paid in tax, NI, pensions, and student loans.
  • Net pay is the amount left after all deductions have been made. This will be your take home pay.
    Important messages are any extra information your employer may or may not include in your payslip.

Keeping your payslip

Make sure to keep your pay slips in a safe place for security, record keeping, and proof of earnings. Because they contain a lot of personal information, it can be a tool for identity fraud, so don’t leave them lying around. Besides, payslips will come handy if there are discrepancies that need to be resolved or when applying for financial products.

Payslip problems

In case of problems with your payslip, talk to someone in your company’s payroll section for clarifications.

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Understanding PAYE 

Claim a PAYE Tax Refund 

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