I’ve just got my first payslip from a new job, I’m slightly embarrassed to say I don’t
understand what all the different sections refer to. How do I know what each means
and if it’s correct?
Congratulations on the new job, hopefully you’re settling into the new role.
There’s no need to be embarrassed about not understanding your payslip, it contains lots
of information which can be tricky to get your head around but it is important to
understand. Your payslip shows your pay, deductions and tax information. All employers
are required to give their employees a payslip and it’s a good idea to keep them for as long
as possible.
The top left corner of your payslip is where you’ll usually find your employer’s details.
Opposite this, in the middle or top right corner, should be your details. This is also where
you might find your payroll or employee number, this is what your employer uses to
identify you for payroll purposes.
Next, you’ll see lots of different numbers and codes. The payment date is when your pay
will normally arrive in your bank account, it can be monthly or weekly and fall on any day
of the month.
Your National Insurance (NI) number refers to your unique number. You must have a NI
number to work in the UK. It’s used to make sure all your NI contributions are recorded
and so you can get any state benefits you’re entitled to, including state pension later in life.
Your payslip might show a tax period, the tax year starts in April and ends in March. The
number here corresponds to the period in which you’re being taxed, eg. if you’re paid
monthly, 01 will represent the tax period in April, while 12 would mean March.
Next is your tax code. This is decided by HM Revenue and Customs (HMRC) and is used by
your employer or pension provider to work out how much Income Tax to take from your
pay. Your tax code is made up of several numbers and a letter. The numbers refer to how
much tax-free income you get while the letters can mean different things depending on
your circumstances. You can find out what they mean on the government website.
Make sure you’re not on an emergency tax code otherwise you’ll be taxed more than
needed.
Now to your pay and deductions. Gross pay, means how much you’ve earned before
anything is deducted. Deductions are amounts taken from your gross pay, common ones
include: income tax, national insurance, pension or student loan payments. Income tax is
the tax you pay on your earnings to fund public services, this is something you have to pay
but the amount will vary depending on your earnings. You pay National Insurance so you
can be entitled to certain benefits, and it also contributes towards the NHS.
Most payslips will add up all the deductions from your pay into a single amount to make it
easier for you to see how much is taken from your pay each month. Your net pay is the
amount of money you will receive after all the deductions have worked out.
Lastly, taxable pay is the amount of your salary, to date in the current tax year, that has
been subjected to tax. This will usually appear next to your net pay figure.
