A sample payslip
Here’s a payslip for someone on £36,000 a year, paid monthly, with a 5% workplace pension and a Plan 2 student loan. The numbers match the sections below.
| This month | Year to date | |
|---|---|---|
| 3 Payments | ||
| Basic pay | £3,000.00 | £21,000.00 |
| 4 Deductions | ||
| Income Tax (PAYE) | -£360.50 | -£2,523.50 |
| National Insurance | -£156.20 | -£1,093.40 |
| Student loan | -£49.61 | -£347.27 |
| Pension (5%) | -£150.00 | -£1,050.00 |
| 5 Net pay | £2,283.69 | £15,985.83 |
An example only: your employer's layout and names will differ. The numbers match the sections of this guide.
1. Your tax code
Your tax code tells your employer how much you can earn tax-free. 1257L is the most common: £12,570 a year, or £1,047.50 a month. Codes ending in M1 or W1, or the letters X, mean an emergency code. See UK tax codes explained for what yours means.
2. Your National Insurance letter
The letter shows which NI rates apply. A is the standard letter for most employees. Others include C for people over State Pension age (no employee NI) and M for under-21s, where your employer pays less NI but you pay the same.
3. Payments
Your gross pay for the period: salary or hours worked, plus any overtime, bonus, holiday pay or sick pay. Here it’s £3,000, a twelfth of £36,000.
4. Deductions
| Deduction | How it’s worked out | In the example |
|---|---|---|
| Income Tax (PAYE) | 20% on pay above your tax-free amount, after a net pay pension | £360.50 |
| National Insurance | 8% on pay between £12,570 and £50,270 a year, 2% above | £156.20 |
| Pension | Your contribution, here 5% of your pay | £150.00 |
| Student loan | 9% of pay over your plan’s threshold (£29,385 a year on Plan 2) | £49.61 |
A few things that surprise people:
- Income Tax is worked out on the year so far, so a big month followed by a small one evens out. National Insurance isn’t: it’s worked out on each payslip on its own.
- How your pension shows depends on your scheme. Under net pay, it comes off before tax. Under relief at source, it comes off after tax and the provider adds 20%. Under salary sacrifice, your gross pay is simply lower.
- Student loan repayments are worked out on each pay period too, so a month with overtime can mean a repayment even if your yearly pay is under the threshold.
5. Net pay
What’s left after deductions: £2,283.69 in the example. This is what should reach your bank account.
A real payslip can differ from these figures by a few pence. Payroll software uses HMRC’s monthly thresholds (£1,048 for National Insurance), and student loan deductions are rounded down to the whole pound.
Year-to-date figures and forms
Most payslips also show your pay and deductions so far this tax year, which starts on 6 April. October is month 7. At the end of the tax year you get a P60 with the year’s totals, and if you leave a job, a P45. Keep both: you’ll need them if you file a tax return or apply for a mortgage.
What to check each time
- The tax code and NI letter look right, and your National Insurance number is correct.
- Your gross pay matches your contract, including overtime.
- The pension percentage is what you chose.
- Any student loan plan is the right one.
If something looks wrong, ask your payroll team first. For a wrong tax code, contact HMRC.
See your own numbers
The salary calculator shows each deduction for your salary, pension and student loan plan, weekly or monthly. See also National Insurance explained and student loan repayments.