Making Sense of Your Payslip: A Quick Guide for UK Employees
Confused by your payslip? Here's a quick guide to common UK payslip terms and what they actually mean—no jargon, just clarity.
There is a ton of information on UK payslips; however, there are several aspects of the payslip that most people have no clue about. Hence, this article will break down the most common terms you will find on your payslip.
Bullet Key Payslip Terms (1 Line Explanation)
- Gross Pay: Total earnings before any deductions.
- Net Pay: The actual sum of pay received after all deductions.
- Tax Code: Tells the employer how much tax-free income can be earned by a person (e.g. 1257L).
- Income Tax: Amount of PAYE tax deducted on income as per tax code.
- National Insurance (NI): Contributions towards state benefits, say, pension and NHS.
- Employer NI: An extra contribution paid by your employer towards NI—doesn't concern your pay.
- Pension Contribution: Amount contributed by you towards workplace pension, typically tax efficient.
- Student Loan: Loans are deducted if you earn above the threshold for repayment.
- PAYE: Pay As You Earn, the scheme of tax and NI deductions directly from salary.
- YTD: Year to Date is an amount showing how much you are earning and taxing for the year so far.
- Deductions: An overview of all amounts deducted from your gross pay.
- Employer Contributions: Additional contributions made by your employer (pensions, benefits, etc.).
Sample Payslip for the UK
Here is a fairly standard example of what a UK Payslip looks like:
Want to Observe Your Payslip?
Use our salary calculator to model your UK payslip on the monthly/yearly basis according to income, pension contributions, tax code, etc. Quick, to the point, and free!
Last Piece of Advice
Do not just let your payslip glance by you; keep on checking it to avoid mistakes and ensure you are correctly taxed. A few minutes' worth of scrutiny could save you hundreds!