Most people look at two numbers on their payslip: gross pay and net pay. Everything in between is a mystery of acronyms and deductions. But understanding each line takes five minutes and can save you real money — because payslip errors are more common than you'd think.
The structure of a UK payslip
Every UK payslip must include certain information by law. Here's what each section means, working through a payslip for someone earning £35,000 per year.
Gross pay
This is your total pay before any deductions. For a £35,000 salary paid monthly, your gross pay is £2,916.67 per month.
Gross pay might include your basic salary plus any overtime, bonuses, commission, or shift allowances earned that month. It may also show "payments" like expense reimbursements — these aren't taxed but they appear on the payslip for record-keeping.
If your gross pay doesn't match what you expect, check whether a bonus or overtime payment has been included or excluded from this particular month.
Tax code
Your tax code appears on every payslip and determines how much income tax you pay. The standard code for 2026/27 is 1257L.
The number (1257) tells your employer how much tax-free income you get per year — multiply by 10 to get £12,570, which is the personal allowance. The letter tells HMRC how to calculate your tax:
- L — standard personal allowance, no adjustments
- BR — all income taxed at basic rate (20%), usually for a second job
- D0 — all income taxed at higher rate (40%)
- K — you owe more tax than your allowance covers (e.g. because of a company car benefit), so HMRC adds tax rather than subtracting allowance
- M — you've received a Marriage Allowance transfer from your spouse
- NT — no tax is due
- S — you're a Scottish taxpayer (followed by the rest of the code)
- C — you're a Welsh taxpayer
If your tax code is wrong, you'll be paying too much or too little tax all year. Check it against your HMRC personal tax account. Common reasons for an incorrect code: HMRC hasn't been told you left a second job, a company benefit has been double-counted, or you're still on an emergency code from when you started.
Income tax
Your monthly income tax deduction is calculated on a cumulative basis, not just on that month's pay. HMRC divides your annual personal allowance by 12, and your employer tracks your total pay and total tax paid so far this year.
This means that if you earn more in one month (because of a bonus or overtime) and less in the next, the tax evens itself out over the year. You won't permanently overpay tax because of a one-off high month.
On a £35,000 salary with a 1257L tax code, your annual income tax is approximately £4,486. That's £373.83 per month. Your payslip shows this as a deduction from your gross pay.
National Insurance
Employee National Insurance for 2026/27 is:
- 8% on earnings between £242 and £967 per week (£12,570–£50,270 per year)
- 2% on earnings above £967 per week
On £35,000, your monthly NI is approximately £149.53 (£1,794.40 per year). The payslip shows this as a separate deduction from income tax.
Your NI number (e.g. QQ 12 34 56 A) also appears on your payslip. This is your unique identifier with HMRC and is used to track your contributions towards state pension entitlement.
Pension contribution
If your employer auto-enrols you into a workplace pension, you'll see a pension deduction. The minimum contribution is 5% from the employee and 3% from the employer (8% total). Some employers offer more generous schemes.
Your payslip should show your contribution amount. Check whether it's calculated on your full salary or on "qualifying earnings" (earnings between £6,240 and £50,270) — the minimum contribution only applies to qualifying earnings, which means it's calculated on a smaller base.
If your employer uses salary sacrifice for pension contributions, your gross pay on the payslip will be lower (because the sacrifice happens before tax), and you won't see a separate "pension" deduction — the money goes directly from your employer to your pension provider.
Student loan
If you have a student loan, your employer deducts repayments from your pay once you earn above the threshold for your plan:
| Plan | Threshold (annual) | Threshold (monthly) | Rate |
|---|---|---|---|
| Plan 1 | £24,990 | £2,082 | 9% |
| Plan 2 | £27,295 | £2,274 | 9% |
| Plan 4 | £31,395 | £2,616 | 9% |
| Plan 5 | £25,000 | £2,083 | 9% |
| Postgraduate | £21,000 | £1,750 | 6% |
The 9% (or 6%) is charged on earnings above the threshold, not on your entire salary. On a £35,000 salary with a Plan 2 loan, your monthly repayment is 9% of (£2,916.67 − £2,274.58) = £57.79.
If you have both an undergraduate and postgraduate loan, both are deducted simultaneously.
Net pay (take-home)
This is what hits your bank account. It's your gross pay minus all deductions: income tax, NI, pension, student loan, and any other deductions (childcare vouchers, cycle-to-work scheme, union subscriptions, etc.).
For our £35,000 example with no student loan and a 5% pension on qualifying earnings:
| Line | Monthly amount |
|---|---|
| Gross pay | £2,916.67 |
| Income tax | −£373.83 |
| National Insurance | −£149.53 |
| Pension (5% of qualifying earnings) | −£111.95 |
| Net pay | £2,281.36 |
Year-to-date figures
Your payslip also shows cumulative figures for the tax year so far: total gross pay, total tax paid, total NI paid. These are essential for checking that your tax adds up over the year. If you change jobs mid-year, your new employer uses your P45 figures to continue the cumulative calculation correctly.
At the end of the tax year (5 April), these figures should match your P60 — the annual summary your employer gives you. If they don't match, contact your payroll department.
How to spot errors
The most common payslip errors:
Wrong tax code. If you've started a new job and HMRC hasn't sent your tax code to your employer yet, you might be on an emergency code (often 1257L M1 or 1257L W1). This taxes each month in isolation rather than cumulatively, which can result in overpaying if you started mid-year. It usually corrects itself within a few months, but check your HMRC personal tax account if it persists.
Pension calculated on wrong base. Some employers calculate pension on total pay, others on qualifying earnings (£6,240–£50,270). If your payslip shows a different pension figure from what you expect, check which base your scheme uses.
Missing overtime or bonus. Overtime worked in one month might not appear on that month's payslip due to payroll processing deadlines. If a payment is missing, check whether it'll appear next month before raising it with payroll.
Student loan deducted when it shouldn't be. If you've repaid your student loan in full, SLC can take several months to notify HMRC, who then notify your employer. If deductions continue after repayment, contact SLC directly and ask for a stop notice.