Why a 10-minute payslip review matters
Most people glance at the net pay figure on their payslip and put it away. That's a mistake. Every other line on the payslip carries information that, if it's wrong, costs real money: an outdated tax code, the wrong NI category, a pension contribution that's been silently lowered. A 10-minute review once a month catches most payroll errors before they accumulate into a meaningful overpayment.
This guide walks through a standard UK payslip top to bottom, explaining what each section means and what to look for.
What employers must legally include
Under the Employment Rights Act 1996, every UK employer must give you an itemised payslip on or before payday. As a minimum, it has to show:
- Your gross pay for the period
- Amounts and reasons for every fixed or variable deduction (tax, NI, pension, student loan, etc.)
- Your net pay — what actually goes into your bank account
- The method of payment if more than one is used (e.g. part by BACS, part by cheque)
- For hourly workers, the number of hours worked at each rate (since 2019)
Most modern payslips show more than the legal minimum — typically year-to-date totals, the tax code, and the NI category letter — which is what we'll work through below.
The top of the payslip: who, when and how
The header usually carries five things: your name, your employee number, the pay date, the tax week or month number, and the period covered. Two things worth checking here:
The tax week or month. The UK tax year starts on 6 April. Week 1 covers 6–12 April; Month 1 covers 6 April – 5 May, and so on. The number tells you how far through the tax year you are. This matters because PAYE is calculated cumulatively — your tax for this period depends on what you've already earned (and been taxed) in the year so far.
The period covered. If you've changed pay frequency (weekly to monthly, for example), the first payslip after the change can look weird. Make sure the period dates make sense — overlap or gaps are unusual and worth questioning.
Your tax code
The tax code is the most important single piece of information on your payslip. It tells your employer how much income to leave untaxed before they start applying PAYE. The standard code for 2026/27 is 1257L, meaning £12,570 of tax-free personal allowance and the standard "L" suffix.
Things that should make you stop and check the code:
- It's changed since last month and you weren't expecting it
- It ends in W1, M1 or X (emergency basis — fine temporarily, not fine if it's been that way for months)
- It starts with K (negative allowance — you're being taxed on benefits or owed tax through PAYE)
- It's BR, D0, D1 or 0T on what should be your main job
Our Tax Code Checker decodes any UK code in seconds and shows exactly what it means for your take-home pay.
National Insurance category letter
Tucked somewhere on the payslip — sometimes at the top, sometimes near the NI deduction line — is a single letter or letter pair. Most working-age employees are on category A, which means standard 8% / 2% NI rates. Other common categories:
| NI letter | Who it applies to |
|---|---|
| A | Most employees, standard rate |
| B | Married women / widows who chose to pay the reduced rate (very rare, pre-1977 elections only) |
| C | Employees over State Pension age — no employee NI |
| H | Apprentices under 25 |
| J | Employees who can defer NI (already paying NI in another job) |
| M | Employees under 21 |
If you've turned State Pension age recently, make sure the letter has changed to C — otherwise you'll be paying NI you don't owe. This is one of the most common silent overpayments on UK payslips.
Gross pay — the earnings section
This is everything you've earned before any deductions, broken out by type:
- Basic pay — your contracted salary or wage for the period
- Overtime — hours above your contract, often at 1.25× / 1.5× / 2× the basic rate
- Bonus / commission — one-off or variable payments, taxed at the same rates as basic pay but because PAYE is cumulative, a big one-off can look like it's been taxed at 50%+
- Holiday pay — paid leave you've taken
- Statutory pay — Sick Pay (SSP), Maternity Pay (SMP), Paternity Pay (SPP), Shared Parental Pay (ShPP). All taxable, all subject to NI, all paid via PAYE
- Backdated pay — pay rise back to a previous date. Same tax treatment, but often pushes you temporarily into a higher band
Deductions — where the money goes
Income Tax (PAYE)
Calculated by your employer using your tax code and HMRC's tables. PAYE works cumulatively: your year-to-date earnings are compared to your year-to-date allowance, and the right amount of tax is deducted to bring you in line. This is why bonus months feel painful and why your tax can sometimes go down mid-year — if you've overpaid earlier in the year, PAYE corrects it.
National Insurance
For 2026/27, employees pay 8% on earnings between £12,570 and £50,270, then 2% on anything above. Unlike Income Tax, NI is not cumulative — each pay period is calculated on its own. A big bonus month means a big NI bill that month, and there's no balancing-out later.
Pension
Three flavours, each labelled slightly differently:
- Salary sacrifice — taken off your gross pay before tax and NI are calculated. The most tax-efficient. Often labelled "Pension SS" or "EE Sal Sac"
- Net pay arrangement (occupational) — comes off before Income Tax but after NI. Labelled "Pension EE" or similar
- Relief at source (personal) — comes off your net pay; the provider claims 25% basic-rate relief on top. Higher and additional-rate taxpayers claim the extra via Self Assessment
Worth double-checking the percentage matches what you signed up for — payroll providers occasionally reset to auto-enrolment minimums after system migrations.
Student loan
Repayments are 9% of income above the plan's threshold (6% for postgraduate). For 2026/27: Plan 1 £26,900 · Plan 2 £29,385 · Plan 4 (Scotland) £33,795 · Plan 5 (2023+ starters) £25,000 · Postgraduate £21,000. If you have both an undergraduate and postgraduate loan, both deductions appear in parallel.
Other lines you might see
- Court orders (attachment of earnings, child maintenance) — appear with a reference number
- Cycle-to-work / EV sacrifice / childcare — appear as separate sacrifice lines
- Charity (GAYE / Give As You Earn) — taken pre-tax, so you get tax relief automatically
- Season-ticket loans, employer loans — repaid through PAYE, usually labelled "Loan repayment"
Year-to-date (YTD) totals
Most payslips show a column of cumulative figures alongside the period figures — typically gross pay YTD, tax paid YTD, NI YTD, pension YTD and net pay YTD. These are the figures HMRC uses to calculate your year-end tax position.
Three sanity checks worth doing once a year, ideally in February or March:
- Gross YTD ÷ months elapsed ≈ your monthly contracted pay. If it's a lot higher you've had bonuses (fine); if it's lower you've had unpaid leave (worth checking)
- Tax YTD against the Take-Home Pay Calculator for your annual salary. Major discrepancies suggest a tax code issue
- Pension YTD ≈ contribution rate × gross YTD. Easy way to catch a payroll glitch where pension contributions stopped
The bottom line: net pay
Your net pay should match what hits your bank account on payday. If they differ, the most common causes are:
- A second BACS payment for expenses or bonuses going to the same account
- A delayed bank transfer (you're looking at the right figure but the wrong day)
- A correction from a previous period — sometimes shown as "Adjustment" rather than a clean separate item
How to spot errors in five minutes
Once you know what every line means, errors stand out. Here's a five-minute monthly review:
- Tax code unchanged from last month? If it changed, do you know why?
- NI letter still right? (Especially if you're approaching State Pension age)
- Gross pay matches your contract for a normal month, or includes the bonus/overtime you expected
- Pension percentage matches what you signed up for
- Student loan plan is the right one — if you finished a course recently you might be on the wrong plan
If you spot something off, the route depends on what it is. Tax code issues go through HMRC (Personal Tax Account or 0300 200 3300). Pay, deduction or pension errors go through your employer's payroll team. NI letter issues go through HMRC. Keep the payslip — you'll need it as evidence.
What to keep, and for how long
HMRC recommends keeping payslips for at least 22 months after the end of the tax year they relate to (so 2026/27 payslips until 31 January 2029). If you're self-employed or have any non-PAYE income, keep them for at least five years after the Self Assessment deadline. Digital copies are fine — most employers' portals retain them indefinitely.
What to do with the knowledge
Knowing exactly what your payslip says you take home is the foundation for any kind of monthly budget worth building. The biggest leak in most household budgets isn't overspending — it's planning around your gross salary rather than the net figure that actually arrives. PennyWise Finance has a useful piece on budgeting from your take-home, not your gross that picks up where this guide leaves off.