A standard UK payslip shows at minimum your gross pay, your net pay and the deductions in between. For most employees, those deductions are Income Tax under PAYE, National Insurance contributions and an automatic enrolment pension contribution. Understanding how each of these is calculated makes it considerably easier to verify that your payslip is correct and to understand what changes to expect when your salary increases.
| Payslip item | What it is | How it's calculated (2026/27) |
|---|---|---|
| Gross pay | Total earnings before deductions | Salary or hourly rate × hours worked |
| Income Tax (PAYE) | Tax collected at source by your employer | Based on your tax code; 20% on earnings above personal allowance (£12,570) up to £50,270 |
| National Insurance (NI) | Contribution towards state pension and benefits | Class 1: 8% on earnings between £12,570 and £50,270; 2% above |
| Pension (auto-enrolment) | Contribution to workplace pension scheme | Minimum 5% employee contribution on qualifying earnings |
| Student loan | Repayment deducted at source if applicable | Plan-dependent: typically 9% of income above threshold |
| Net pay | Take-home amount after all deductions | Gross minus all the above |
Your tax code: the most important number on your payslip
The tax code shown on your payslip tells your employer how much Income Tax to deduct each month. The most common code for employees with one job and no unusual circumstances is 1257L, which means the standard personal allowance (£12,570) applies. Emergency codes (W1, M1, or X suffix) can result in significantly higher tax being deducted temporarily, usually when an employer doesn't yet have your full income history. If you see an emergency code and have been in the same job for more than two months, contacting HMRC to confirm your correct code is worthwhile.
Pension contributions and your take-home pay
Auto-enrolment contributions are taken as a percentage of "qualifying earnings" — the portion of your salary between £6,240 and £50,270 per year. The employee minimum is 5% of that band, with employer contributions of at least 3%. Some employers offer salary sacrifice pension arrangements, which reduce both your taxable income and your National Insurance — effectively allowing you to contribute to your pension at a lower net cost than the headline percentage suggests.
Five things to check on every payslip
- Your tax code — if it has changed unexpectedly, check with HMRC.
- The total year-to-date figures — these tell you whether your cumulative tax and NI match expectations.
- Any one-off deductions or additions — bonuses, overtime, benefit deductions and expense reimbursements all appear here.
- Your pension contribution amount and whether it matches the rate you agreed.
- That the hours or days paid match what you actually worked.
Payslip errors do occur, and the most common ones — wrong tax code, miscalculated hourly pay, pension deductions on incorrect salary amounts — are almost always fixable once identified. Keeping digital copies of payslips and checking them against expected figures each month takes five minutes and creates a useful record if a discrepancy arises later.