Your UK Payslip Explained in Two Minutes

Your payslip arrives every month. You glance at the bottom number, confirm it roughly matches your bank account, and move on. But those other lines matter — and checking them takes less time than making a cup of tea.

Your Earnings

Gross Pay is your total pay before anything gets taken off. On a £36,000 salary, that's £3,000 per month. You might also see it broken down into:

• Basic Pay — your contracted salary
• Overtime — extra hours at an agreed rate
• Bonus — performance or one-off payments
• Arrears — back pay from a salary adjustment

The Deductions

This is where the money goes. The main ones:

Income Tax — calculated using your tax code and the current HMRC tax bands. On a £36,000 salary, expect about £390/month.

National Insurance (NI) — funds the State Pension and NHS. At £36,000, roughly £156/month.

Pension — your workplace pension contribution. Most employees contribute around 5% of qualifying earnings. If your employer uses salary sacrifice, this comes off before tax — saving you money.

Student Loan — deducted automatically above the repayment threshold. Plan 2 (post-2012 graduates) kicks in at £27,295/year, at 9% of everything above that.

The Summary

Net Pay is what lands in your bank account. This is the number that matters for budgeting.

YTD (Year to Date) shows running totals since 6 April — how much you've earned and how much has been deducted across the tax year so far. Useful for checking whether your tax adds up over the full year, not just one month.

Your Tax Code

You'll see something like 1257L on your payslip. This tells your employer how much of your income is tax-free. 1257L = standard £12,570 Personal Allowance.

BR means all income from that job is taxed at 20% (typical for a second job). A K code means you owe extra tax, usually from benefits in kind like a company car.

Wrong tax code = wrong deductions. If yours looks off, check your personal tax account on GOV.UK.

Employer Contributions

Some payslips show what your employer pays on top of your salary:

• Employer NI — 15% on your earnings above £5,000/year (from April 2025). Doesn't reduce your pay.
• Employer Pension — at least 3% of qualifying earnings, though many employers contribute more.

These don't affect your take-home pay directly, but they're worth knowing when comparing total compensation between jobs.

Five Things to Check Every Month

1. Tax code — still correct? (1257L for most people)
2. Gross pay — matches your contract?
3. Pension percentage — what you agreed to?
4. Student loan — being deducted at the right plan?
5. Net pay — matches what hit your bank?

If something looks wrong, run your numbers through our salary calculator first. If the calculator agrees with your payslip but the figures aren't what you expected, your tax code probably needs updating with HMRC.

Payslip errors are more common than you'd think. Thirty seconds of checking each month beats discovering a problem six months later.