How to Read Your Payslip: Every Line Explained

Your payslip is the most important financial document you get every month, and most people never read past the bottom line. A two-minute check each payday catches tax code mistakes, missing overtime and pension errors before they cost you money.

The top: who and when

• Employer and employee details. Your name, employee number, and sometimes your department.
• Pay date and period. For example “Month 7” means the seventh month of the tax year (October). Week numbers run 1–52 from 6 April.
• Tax code. Usually 1257L or S1257L. Check it’s not an emergency code (ending W1, M1 or X) and that the number matches your allowance. See tax codes explained.
• NI number and category letter. Most people are category A.

Payments: what you earned

• Basic pay or salary. Your contractual pay for the period. Annual salary ÷ 12 for monthly pay.
• Overtime. Hours × rate × multiplier. Check the hours against your timesheet.
• Bonus or commission, if paid this period.
• Holiday pay. For variable hours, this should include regular overtime.
• Statutory pay: sick, maternity, paternity or shared parental pay.
• Allowances, such as car or shift allowances. These are taxable.

Gross pay is the total of all payments before deductions.

Deductions: what comes off

Before tax (reduces taxable pay)

• Salary sacrifice: pension, cycle to work, electric car. This may show as a negative payment instead.
• Pension under a net pay arrangement.

Statutory deductions

• Income Tax (PAYE). Cumulative: worked out on your pay for the whole year so far, minus tax already paid.
• National Insurance. Worked out on this period’s pay alone.
• Student loan / Postgraduate loan. 9% (or 6%) of pay above the period threshold, rounded down to the pound.

After tax

• Pension under relief at source. You pay 80% and your provider claims the 20% tax relief.
• Give As You Earn, union fees, season ticket loans, attachments of earnings.

Net pay is what lands in your bank account.

Year-to-date (YTD) figures

Most payslips show taxable pay to date and tax paid to date. These are what payroll uses for cumulative tax. A quick check: tax to date should be roughly 20% of (taxable pay to date − allowance to date) for a basic-rate taxpayer.

If you joined part-way through the year, your previous employer’s figures should be on your P45 and included here.

Employer contributions

Many payslips also show what your employer paid, which doesn’t come out of your pay:

• Employer pension contribution. At least 3% of qualifying earnings under auto-enrolment.
• Employer NI. Sometimes shown, sometimes not.

A monthly checklist

1. Is the tax code right and not an emergency code?
2. Is gross pay right, including any overtime, bonus or pay rise?
3. Is NI roughly 8% of pay above £1,048 a month?
4. Is the student loan deduction for the right plan?
5. Has the pension gone through at the right percentage?
6. Does net pay match what arrived in your bank?

Compare your payslip with our calculator

Enter your salary, tax code, student loan and pension in the take-home pay calculator and compare the monthly column with your payslip. Small differences (a few pence) come from payroll rounding, and differences in the first months of a job usually come from cumulative tax catching up. Big differences are worth raising with payroll or HMRC.

Keep your payslips

Keep payslips and your annual P60 (issued by 31 May) for at least a few years. You’ll need them for mortgage applications, tax refund claims and to check your State Pension record.