Citizens Advice: Understanding your payslip

​​“I’ve just got my first payslip from a new job, I’m slightly embarrassed to say I don’t understand what all the different sections mean. How do I know what they are and if it’s correct?”
By Jane Chippindale
Published 3rd Apr 2024, 09:57 BST
There’s no need to be embarrassed about not understanding your payslip, it contains lots of information which can be tricky to get your head around, but it is important to understand. Photo: AdobeStockThere’s no need to be embarrassed about not understanding your payslip, it contains lots of information which can be tricky to get your head around, but it is important to understand. Photo: AdobeStock
There’s no need to be embarrassed about not understanding your payslip, it contains lots of information which can be tricky to get your head around, but it is important to understand. Photo: AdobeStock

By Kirklees Citizens Advice & Law Centre chief executive Nick Whittingham

There’s no need to be embarrassed about not understanding your payslip, it contains lots of information which can be tricky to get your head around, but it is important to understand. Your payslip shows your pay, deductions and tax information. All employers are required to give their employees a payslip and it’s a good idea to keep them for as long as possible.

The top left corner of your payslip is where you’ll usually find your employer’s details. Opposite this should be your details. You might also find your payroll or employee number – this is what your employer uses to identify you for payroll.

The payment date is when your pay will normally arrive in your bank account, it can be monthly or weekly and fall on any day of the month.

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    Your National Insurance (NI) number refers to your unique number. You must have a NI number to work in the UK. It’s used to make sure all your NI contributions are recorded and so you can get any state benefits you’re entitled to, including state pension later in life.

    Your payslip might show a tax period, the tax year starts in April and ends in March. The number corresponds to the period in which you’re being taxed, eg. if you’re paid monthly, 01 will represent the tax period in April, while 12 would mean March.

    Your Tax Code is decided by HM Revenue and Customs (HMRC) and is used by your employer or pension provider to work out how much Income Tax to take from your pay, and is made up of several numbers and a letter. The numbers refer to how much tax-free income you get while the letters can mean different things depending on your circumstances. You can find out what they mean on the government website.

    Make sure you’re not on an emergency tax code, or you’ll be taxed more than needed.

    Now to your pay and deductions. Gross pay means how much you’ve earned before anything is deducted. Deductions are amounts taken from your gross pay, common ones include income tax, national insurance, pension or student loan payments. Income tax is the tax you pay on your earnings to fund public services and the amount will vary depending on your earnings. You pay National Insurance so you can be entitled to certain benefits, and it also contributes towards the NHS.

    Most payslips will add up all the deductions from your pay into a single amount to make it easier for you to see how much is taken from your pay each month. Your net pay is the amount of money you will receive after all the deductions have worked out.

    Lastly, taxable pay is the amount of your salary, to date in the current tax year, which has been subjected to tax. This will usually appear next to your net pay figure.

    If you would like to speak to Kirklees Citizens Advice and Law Centre, you can call us on 0808 278 7896 (Freephone), or visit our contact centre in Dewsbury. We can help with issues such as housing, employment, debt, benefits, and more. See our website at http://www.kcalc.org.uk for more information.