If you've ever wondered what all the lines on your payslip actually mean, this guide is for you. Between your gross pay at the top and the amount that lands in your account at the bottom sit tax, National Insurance, and often a pension or student loan, plus the occasional entry that's only there so the right tax gets collected. We'll go through them one at a time.
The main lines on a payslip
Your payslip starts with gross pay at the top. This is your salary before anything comes off. It ends with net pay or take home pay at the bottom, the amount that reaches your account. Everything in between is a deduction or an adjustment.
By law, your payslip has to show both of those figures along with the amount and purpose of every deduction. Deductions that change from one pay period to the next, mainly Income Tax and National Insurance, must be shown as amounts each time. If your pay depends on the hours you work, those hours have to appear too. Most payslips also carry year-to-date (YTD) totals, which add up your pay, tax and deductions so far in the current tax year.
Some lines might be fixed and look the same each month, such as a salary sacrifice or union subscription. Others are variable and move with your earnings, such as tax and National Insurance. A few are not deductions at all but additions or corrections that change the tax worked out for that period. Here is what the common lines mean.
| Payslip line | What is it? | Effect on tax and take-home pay |
|---|---|---|
| PAYE / Income Tax | Income Tax collected through payroll | Reduces take-home pay; the amount depends on your tax code, taxable pay and where in the UK you live |
| Employee NI | Class 1 National Insurance on your earnings | Reduces take-home pay; worked out separately from tax and per pay period, so bonus or overtime months can jump |
| Pension | Your workplace pension contribution | Reduces take-home pay now, and depending on the method can also lower the tax or NI you pay |
| Student loan | Student or postgraduate loan repayment | Reduces take-home pay once earnings pass the plan threshold; it is not a tax and does not change your tax bill |
| Salary sacrifice | Salary given up for a benefit or pension | Lowers your gross taxable pay, so it usually cuts the tax and NI due as well as your cash pay |
| Payrolled benefit | Taxable value of a benefit, such as a company car or medical cover | Adds to your taxable pay so more tax is collected, even though you receive no extra cash |
| Share award or options | Value or gain from employment-related shares | Can add taxable pay and trigger tax and NI, depending on the scheme and share type |
| Voluntary or fixed deduction | An agreed deduction such as a union fee or season ticket loan | Reduces take-home pay; usually taken after tax, so it does not change your tax bill |
| Adjustment or correction | A one-off payroll fix, such as back pay or recovering an overpayment | Can raise or lower that period's pay, tax and NI |
To see how the main deductions look for a given salary, use the Salary calculator to calculate tax, National Insurance, pension contributions, student loan repayments and take home pay.
PAYE Income Tax and your tax code
For most employees, Income Tax is the largest deduction on the payslip. It is collected through PAYE (Pay As You Earn), which means your employer works out the tax and sends it to HMRC each payday, rather than leaving you to pay it in one lump at the end of the year. The aim is to spread your tax evenly across the year, so most months look the same unless there is a change to your pay or tax code.
How much comes off depends on two things: your tax code and how much you earn.
Your tax code tells your employer how much tax-free pay to give you and how to apply it. The standard code for 2026/27 is 1257L, which reflects the £12,570 Personal Allowance, the amount you can earn before Income Tax starts. That allowance is spread across the year, so a monthly payslip gives you roughly £1,047 of tax-free pay each time. Codes such as BR, 0T or K work differently, and a wrong code is one of the most common reasons take-home pay looks wrong. The Tax codes explained guide breaks down the different codes in more detail.
Your earnings then fall into tax bands. In England, Wales and Northern Ireland for 2026/27, pay above the allowance is taxed at 20% up to £50,270, 40% from £50,271 to £125,140, and 45% above that. These thresholds are frozen until April 2028, so as pay rises over the years, more of it can be pulled into a higher band. PAYE only charges tax on the income you have actually been paid so far, which is why a month with a bonus or overtime can produce a bigger tax figure than usual.
Scotland. If you are a Scottish taxpayer, your code starts with an S and your pay is taxed using the Scottish bands and rates, which differ from the rest of the UK and include more bands. Wales. Welsh taxpayers have codes that start with C, but the Welsh rates currently match those in England and Northern Ireland.
Employee National Insurance
National Insurance is a separate deduction from Income Tax, with its own rates and thresholds, so the two amounts often change independently. As an employee you pay Class 1 National Insurance on your earnings above a threshold. These contributions build your entitlement to the State Pension and some other state benefits: a year in which you pay enough counts as a qualifying year towards your State Pension, and your record also affects benefits such as Maternity Allowance and New Style Jobseeker's Allowance.
For 2026/27, there is no National Insurance on the first slice of pay, up to the Primary Threshold of £12,570 a year (about £1,048 a month, or £242 a week). On earnings above that and up to the Upper Earnings Limit of £50,270 a year, the employee rate is 8%. Above the Upper Earnings Limit, the rate drops to 2%.
The biggest practical difference from Income Tax is timing. Income Tax is normally cumulative, so the payroll calculation takes into account your pay for the whole year to date and smooths the tax across the months. National Insurance is worked out separately for each pay period. Each week or month stands on its own, with no looking back and no adjustments based on other periods.
That is why your National Insurance can jump in a single month even when your rate has not changed.
Example. Suppose you earn £3,000 a month and receive a £2,000 bonus in July. On a normal £3,000 month, employee NI is about £156 (8% on the pay above the monthly threshold). In July your pay is £5,000, so more of it is charged at 8% and a small slice tips into the 2% band, bringing the NI to about £268 for that month. Because each month is separate, a lower pay month afterwards does not pay the extra back, the way cumulative Income Tax sometimes does. (This assumes the standard category A and the 2026/27 monthly thresholds.)
Category letters. Your payslip may show your National Insurance category letter, which determines which rates are applicable. Most employees are on category A, the standard letter. The others reflect specific circumstances: M for employees under 21 and H for apprentices under 25 (where the employer pays a lower rate, though your own deduction still follows the 8% and 2% pattern), C or S once you are over State Pension age, and J or Z where your National Insurance is deferred because you already pay the maximum through another job.
Over State Pension age. Once you reach State Pension age, you generally stop paying employee National Insurance, even if you carry on working. Your employer still pays their share, but your own NI line should fall to zero.
Pension contributions
For many people the pension line is the most confusing part of the payslip, because the same contribution can be handled in three different ways, and each one affects Income Tax and National Insurance differently. The method is set by your employer's scheme rather than by you. The full mechanics are covered in How pension tax relief works in the UK; what follows is how each method shows up on the payslip.
Relief at source. Your contribution is taken from your pay after Income Tax and National Insurance. Your pension provider then claims 20% basic-rate tax relief from HMRC and adds it to your pension, so an £80 contribution becomes £100 in the pot. Your taxable pay on the payslip is unchanged, and the top-up does not show on the payslip at all. If you pay higher-rate tax, you can claim the extra 20% relief separately through your tax return or on HMRC's website.
Net pay arrangement. Despite the name, your contribution comes out before Income Tax is worked out. That lowers your taxable pay, so you get full relief at your highest rate straight away, with nothing to claim back. It does not reduce your earnings for National Insurance, so your NI is the same as if you had not contributed.
Salary sacrifice. You agree to give up part of your salary, and your employer pays that amount into your pension instead. Because your contractual pay is lower, both Income Tax and employee National Insurance are worked out on the reduced figure, so this method currently cuts your NI as well as your tax. On the payslip your gross and taxable pay are lower, and you may not see a separate employee pension deduction, because the contribution is made by your employer. The Salary sacrifice pension calculator shows how this changes take-home pay.
How much you contribute. If you were enrolled automatically, the minimum total contribution is 8% of your qualifying earnings, made up of at least 3% from your employer and the rest, usually 5%, from you including tax relief. For 2026/27, qualifying earnings are the part of your pay between £6,240 and £50,270, so the percentage on your payslip is based on that band rather than your whole salary. Many employers pay more than the minimum or work it out on full pay, so two people each paying "5%" can still se
Student loan and postgraduate loan deductions
If you are repaying a student loan, the repayment comes off your pay through payroll once your earnings pass the threshold for your plan. It is collected alongside Income Tax and National Insurance, but it is not a tax: you are repaying what you borrowed, and it does not reduce your taxable pay or change your tax and NI.
Which plan you are on depends on when and where you studied, and it sets both your threshold and your rate. Your employer applies the plan type from the details you gave when you joined, or from a notice HMRC sends them.
| Repayment plan | Annual threshold (2026/27) | Rate above threshold |
|---|---|---|
| Plan 1 | £26,900 | 9% |
| Plan 2 | £29,385 | 9% |
| Plan 4 (Scotland) | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate Loan | £21,000 | 6% |
Above the threshold you repay 9% of the excess on Plans 1, 2, 4 and 5, and 6% on a Postgraduate Loan. Because the plan type and threshold drive the figure, two people on the same salary can repay different amounts, and one may repay nothing at all. Your outstanding balance does not affect the monthly deduction.
Like National Insurance, the repayment is worked out for each pay period rather than across the year, so a month with a bonus or overtime produces a larger repayment that month. If a one-off payment is the only reason your pay crossed the threshold and your income for the whole year stays below it, you can ask the Student Loans Company for a refund after the tax year ends.
If you have both an undergraduate plan and a Postgraduate Loan, you may see two separate deductions on the same payslip, one at 9% and one at 6%.
When the loan is nearly repaid, the Student Loans Company tells your employer to stop deducting, and the final months may switch to direct debit so you do not overpay. It is worth checking that the deduction stops once the balance is clear.
Other deductions, benefits and adjustments
Beyond tax, National Insurance, pension and student loans, a payslip can carry a range of other lines. They vary so much between employers that a calculator cannot model them all, but most fall into a few recognisable types. The key distinction is whether a deduction comes off before tax, and so lowers your taxable pay, or after tax, and so only reduces the cash you take home.
Before-tax deductions. Salary sacrifice schemes, such as cycle to work, extra pension contributions or an electric car scheme, reduce your gross taxable pay, which lowers the tax and usually the National Insurance charged. Payroll giving, where you donate to charity straight from your pay, comes off before Income Tax, so you get relief at your highest rate, but National Insurance is still charged on the amount you give. If you are looking at a cycle to work scheme, the Cycle to work scheme calculator shows how the saving works.
After-tax deductions. Union subscriptions, season ticket loan repayments and repayments of a salary advance are taken after tax and National Insurance, so they do not change your tax bill. The same applies to court orders, such as an attachment of earnings order or a Direct Earnings Attachment, which your employer is legally required to apply. If your employer is recovering an earlier overpayment, that can appear as an after-tax deduction too.
Your rights over deductions. An employer can only take money from your pay where the law requires it (such as tax and NI), where your contract allows it and you have been given the written terms, or where you have agreed to it in writing beforehand. Consent cannot be backdated to cover something that has already happened. Your payslip must show variable deductions as amounts, and either list each fixed deduction with its purpose or give you a separate written statement of fixed deductions and show the total. Some cases have extra limits: deductions for till or stock shortages in retail work, for example, are capped at 10% of your gross pay in a pay period. If a deduction looks wrong or unauthorised, raise it with payroll or HR first; Acas sets out what to do if it is not resolved.
Additions and taxable amounts on your payslip
Sometimes you may have amounts added to your taxable pay. Some additions are money you have earned, while others are amounts included so that the right tax and National Insurance can be collected, even though no extra cash reaches you. Telling the two apart is the key to reading this part of the payslip.
Extra cash you have earned. Bonuses, overtime, commission and back pay are added to your gross pay and taxed like the rest of your earnings. Because PAYE and National Insurance are worked out for each pay period, a large one-off payment can be taxed more heavily in the month it lands, as covered in the National Insurance section above. Expenses and mileage your employer pays back to you are different: genuine business costs are usually not taxable and simply reimburse money you have already spent.
Benefits in kind. A company car, private medical insurance or a similar perk has a taxable value even though it is not cash. If your employer payrolls the benefit, that value is added to your taxable pay each period so the tax comes off through PAYE. Your taxable pay can then be higher than your salary, with more Income Tax deducted, while the benefit itself stays as the car or the cover rather than money in your account. For example, medical insurance worth £600 a year adds about £50 a month to your taxable pay; you pay tax on that £50, but no extra cash arrives. Many benefits also carry employer Class 1A National Insurance, which your employer pays, not you.
Share awards and options. If you receive shares or share options through work, their taxable value or gain can appear on the payslip so tax and National Insurance can be collected. Whether anything is taxed, and when, depends on the scheme. Tax-advantaged schemes, such as Sharesave (SAYE), a Share Incentive Plan, Enterprise Management Incentives or a Company Share Option Plan, can avoid Income Tax if their conditions are met, while other awards are usually taxed when they vest or are exercised. Where the shares are easy to sell, such as listed shares, PAYE and National Insurance are applied through payroll. With net settlement, your employer holds back some of the shares to cover that tax, so you may see a tax and NI entry without a matching cash payment. This is a complex area, so check your scheme documents and consider advice for anything
Why a calculator may not match your payslip exactly
A take-home pay calculator annualises your salary and assumes a steady, regular pattern across the year. Real payroll works one period at a time, using the exact figures HMRC and your employer hold. Small differences between the two are normal and do not mean either is wrong.
A few things explain most of the gap.
Pay-period timing. A calculator spreads your pay evenly, while payroll taxes each month or week as it comes. National Insurance and student loan repayments are worked out per period, so a bonus or overtime month will not match a smooth annual average.
Your tax code. A calculator uses a standard code, or the one you type in. Payroll applies the exact code HMRC has issued, which can change part way through the year and may include a catch-up for earlier months.
Your year-to-date position. Payroll takes account of your pay and tax so far this year. Starting a job mid-year, a pay rise, or a refund of tax from an earlier month can all make a single payslip differ from an annual estimate.
Pension and benefits. A calculator assumes a standard pension basis, often qualifying earnings, but your employer may use your full pay or a different definition. Payrolled benefits, salary sacrifice and one-off corrections also move your taxable pay in ways a simple estimate may not capture.
This is why the Salary calculator is best for modelling scenarios, such as comparing a new salary or a change to your pension, rather than auditing a payslip to the penny. To check a specific payslip, the more reliable approach is to compare it with last month's and with your year-to-date totals, which the next section covers.
What to check if your take-home pay changes
If your net pay suddenly looks different, the quickest way to find out why is to put the payslip next to last month's and compare the lines and tax code. More often than not, there is a new deduction or your tax code has been updated by HMRC.
- 1Gross pay, and any change to your hours, bonus or overtime
- 2Taxable pay, which can differ from gross pay if you have a pension or salary sacrifice
- 3Your tax code, and whether it has changed since last month
- 4Income Tax and employee National Insurance
- 5The pension line
- 6Any student loan deduction
- 7Benefits, salary sacrifice or one-off adjustments
If a deduction has a label you do not recognise, ask your payroll or HR department to explain it; they will be able to tell you what a deduction is for.
For a tax-code problem, the fastest route is HMRC's Check your Income Tax service or your personal tax account, where you can see the code your employer is using and the income and benefits it is based on. If you have just started a job, allow about 35 days for HMRC to receive your new details before getting in touch. For a student loan query, your employer applies the plan HMRC tells them to use, so questions about your plan type or balance usually go to the Student Loans Company. If you think a deduction has been taken without the right authority, raise it with your employer first, then see Acas for what to do next.