How to Read Your UK Payslip
Last reviewed: April 2026 · 2026/27 figures
Every line on your payslip represents a real calculation. This guide explains each deduction, shows a worked example for a £35,000 salary, and tells you what to do if your payslip looks wrong.
At a glance
- ✓Gross pay is before deductions; net pay (take-home) is after income tax, NI and pension
- ✓Your tax code controls how much income tax-free allowance your employer applies each month
- ✓Employee NI is 8% on earnings between £12,570 and £50,270 — separate from income tax
- ✓Student loan deductions appear after tax and NI, based on your repayment plan threshold
Your payslip, line by line
Your total earnings before any deductions. For salaried workers this is your annual salary ÷ 12 (monthly) or ÷ 52 (weekly). It includes basic salary, overtime, commission and taxable benefits.
Deducted through PAYE. Calculated on your earnings above the Personal Allowance (£12,570 in 2026/27). Basic rate is 20% up to £50,270. Higher rate is 40% above £50,270. Your tax code determines your allowance.
Employee NI is 8% on earnings between £12,570 and £50,270 per year. You do not pay NI below £12,570 (the Primary Threshold). NI is separate from income tax and funds the state pension and NHS.
If you are auto-enrolled, at least 5% of qualifying earnings comes from you and at least 3% from your employer. The contribution can be via relief-at-source (taken from net pay, topped up by HMRC) or net pay arrangement (deducted before tax). Salary sacrifice reduces gross pay before any tax is calculated.
Repayments depend on your plan: Plan 2 (most graduates) repays 9% on earnings above £27,295/year. Plan 1 repays 9% above £24,990. Plan 5 (2023+ courses) repays 9% above £25,000. These are deducted after tax and NI.
What arrives in your bank account. Gross pay minus all deductions. This is your take-home pay. Use our salary calculator to verify your net pay matches what you expect.
Worked example: £35,000 salary 2026/27
Here is how a typical monthly payslip looks for a £35,000 salary (Plan 2 student loan, 5% pension, no other deductions, England):
| Item | Annual | Monthly |
|---|---|---|
| Gross salary | £35,000 | £2,916.67 |
| Income tax (20%) | −£4,486 | −£373.83 |
| Employee NI (8%) | −£1,795 | −£149.58 |
| Pension (5%) | −£1,750 | −£145.83 |
| Student loan Plan 2 | −£694 | −£57.83 |
| Net take-home pay | £26,275 | £2,189.58 |
Figures are approximate. Use the salary calculator with your exact figures for a precise breakdown.
What to do if your payslip looks wrong
- 1
Check your tax code
Your tax code is printed on your payslip. Use the tax code checker to see if it matches what HMRC should have issued. The most common code is 1257L — anything else should be understood.
- 2
Run your expected deductions
Use the salary calculator with your gross pay, tax code, pension percentage and student loan plan. Compare the output to your payslip. If the numbers differ significantly, something may be wrong.
- 3
Talk to your payroll department
Payroll teams can tell you exactly why each deduction was made. They can also confirm what HMRC data they received about your tax code. Most errors are resolvable quickly at this stage.
- 4
Contact HMRC if the code is wrong
If your tax code is incorrect (for example, you are on an emergency code or it shows the wrong allowance), call HMRC Income Tax: 0300 200 3300. You can also update your code via your Personal Tax Account at gov.uk.
- 5
Claim a refund if you've overpaid
Overpaid PAYE tax is usually refunded automatically at year-end via a P800. If you want it sooner (e.g. you have left a job and won't return to work this tax year), you can claim directly through HMRC.
Frequently asked questions
Frequently asked questions
Why does my payslip show less tax than I expected?
Your employer calculates PAYE on a cumulative basis — meaning they consider your total earnings year-to-date and the total tax you should have paid. If you started part-way through the tax year, or had untaxed income earlier, your monthly deduction may vary. An emergency code (BR, 0T or W1/M1) causes flat-rate deductions regardless of year-to-date position.
What does 'W1' or 'M1' mean on my payslip?
W1 (week 1) and M1 (month 1) are non-cumulative codes — your tax is calculated as if each pay period is week 1 or month 1 of the year, without reference to previous earnings. This is common with new jobs or emergency codes. Contact HMRC to get your code changed to a cumulative one, which may result in a refund if you have overpaid.
My employer deducted more pension than I expected — why?
Pension deductions are calculated on 'qualifying earnings', which for auto-enrolment is earnings between £6,240 and £50,270/year. The contribution percentage applies to this band, not your full salary. Your employer may also have a different qualifying earnings definition — check your employment contract or pension scheme rules.
I have two jobs — why is my second job taxed more?
Your Personal Allowance (£12,570) is assigned to one job only, usually your main job. Your second job gets a BR code, meaning all earnings are taxed at 20% flat with no allowance. This does not mean you are overpaying overall — it is how PAYE works across two employers. At year-end HMRC reconciles and any overpayment is refunded via a P800.
What should I do if I think my payslip is wrong?
First, check your tax code on the payslip or on your Personal Tax Account at gov.uk. Use TaxHelper's salary calculator to verify the expected deductions. If there is a discrepancy, contact your payroll department first — they can check the PAYE data sent to HMRC. If the code itself is wrong, call HMRC on 0300 200 3300 or update it via your Personal Tax Account.