Understanding Your PAYE Payslip: What Each Line Means
How to read your PAYE payslip in 2026/27. Learn what each deduction means, from income tax to National Insurance, and ensure you're being paid correctly.
Your monthly payslip contains crucial information about your earnings and deductions, but the terminology can be confusing. As of 2026, the PAYE system continues to collect Income Tax and National Insurance from employees, and your payslip is the record of what has been deducted. Understanding each line helps you spot errors, claim refunds, and ensure you are being paid correctly.
This guide breaks down every line on your PAYE payslip so you understand exactly what you are being paid and what is being deducted.
For a broader understanding of how the UK tax system works, our how the UK tax system works for employees guide explains the key principles. If you are concerned about your tax code, our how to check and correct your HMRC tax code guide walks through the steps to fix errors.
Your PAYE payslip shows your gross pay, deductions for Income Tax and National Insurance, pension contributions, student loan repayments, and your final net pay. Checking it regularly helps you spot errors early.
What Is PAYE
Pay As You Earn (PAYE) is the system HMRC uses to collect Income Tax and National Insurance from employees. Your employer deducts these amounts from your salary before you receive payment, then sends them directly to HMRC on your behalf.
Under PAYE, your employer uses your tax code to calculate how much tax to deduct from each payslip. The tax code is provided by HMRC and reflects your Personal Allowance and any adjustments for benefits, underpaid tax, or other factors.
For a detailed breakdown of tax codes, our complete list of UK tax codes explains every code you might see on your payslip.
PAYE is the system through which employers deduct Income Tax and National Insurance from employees' pay before it reaches their bank account. Your tax code determines how much tax is deducted.
Essential Payslip Information
Your payslip contains several pieces of essential information that identify you and your employment.
Employee Number or Payroll Number is your unique identifier in your employer's payroll system. You will need this when querying pay issues or contacting your payroll department.
National Insurance Number is your unique NI number, which should be in the format AB 12 34 56 C. Check this is correct, as errors can affect your state pension entitlement and National Insurance record.
Tax Code shows how much tax-free income you are entitled to. The most common code for 2026/27 is 1257L, which gives you the standard £12,570 Personal Allowance. If your code seems wrong, you should check it with HMRC.
Pay Period shows which period this payslip covers. For example, Month 7 of 12 for October in a typical April to March tax year.
If your tax code is not 1257L, our 1257L tax code guide explains the standard code in detail, and our guide to sudden tax code changes explains common triggers for changes.
Your payslip includes your employee number, National Insurance number, tax code, and pay period. Check these details are correct to avoid issues with your tax and pension records.
Earnings Breakdown
Your earnings are broken down into several categories before any deductions are applied.
Basic Salary or Wages is your main contracted pay before any deductions. For monthly employees, this is usually your annual salary divided by 12.
Overtime shows additional hours worked beyond your contracted hours, often paid at enhanced rates such as time-and-a-half on weekends or bank holidays.
Bonuses or Commission are performance-related pay. These are fully taxable and subject to National Insurance.
Allowances are additional payments such as car allowance, shift allowance, or London weighting. These are usually taxable unless specifically exempt.
Total Gross Pay is the sum of all earnings before any deductions. This is the amount used to calculate your tax and National Insurance.
If your gross pay does not match what you expected, check against your employment contract, timesheets, or any overtime records. Report discrepancies to your payroll department.
For more on how different types of pay are taxed, our how overtime pay is taxed guide and UK bonus tax guide explain the rules in detail.
Gross pay includes your basic salary, overtime, bonuses, commission, and allowances. Total gross pay is the figure used to calculate your tax and National Insurance deductions.
Deductions Explained
Several deductions are taken from your gross pay before you receive your net pay. Understanding each deduction helps you verify that the correct amounts are being taken.
Income Tax
Your Income Tax deduction is calculated using your tax code and the tax bands that apply to your income.
At the time of writing, the Income Tax bands are:
- 0% on the first £12,570 (your Personal Allowance)
- 20% on income from £12,571 to £50,270 (Basic Rate)
- 40% on income from £50,271 to £125,140 (Higher Rate)
- 45% on income above £125,140 (Additional Rate)
Tax This Period shows the tax deducted from this pay period only.
Tax Year to Date shows the total tax you have paid since the start of the tax year, which runs from 6 April to 5 April. Check this figure regularly to spot errors early.
Use our Income Tax Calculator to check whether your tax deductions are correct.
National Insurance Contributions
Employee NI is your National Insurance contribution. At the time of writing, the employee National Insurance rates are:
- 0% on earnings up to £12,570 per year
- 8% on earnings between £12,570 and £50,270
- 2% on earnings above £50,270
Your National Insurance contributions build your entitlement to the state pension and certain benefits.
NI Category Letter is usually A for standard employees. Other letters such as B, C, H, or M indicate different contribution rates for specific circumstances, such as being over state pension age or married women's reduced rate.
Our National Insurance Calculator can help you verify your NI contributions.
Pension Contributions
Pension Deduction is your contribution to a workplace pension scheme. This is usually deducted from your salary before tax through a salary sacrifice or net pay arrangement, which saves you Income Tax and National Insurance on the contribution.
Employer Pension Contribution may appear for information. This is money your employer adds to your pension and does not affect your take-home pay.
Most workplace pensions require minimum contributions of 5% employee and 3% employer, totalling 8%.
Our Pension Tax Relief Calculator can help you understand the tax savings from pension contributions.
Student Loan Repayments
If you are repaying a student loan through PAYE, you will see a deduction for your student loan repayment. The repayment plan and threshold depend on when and where you started your studies.
At the time of writing, the plans and thresholds are:
- Plan 1 (pre-2012): 9% of earnings above £26,900
- Plan 2 (2012-2023): 9% of earnings above £29,385
- Plan 4 (Scottish students): 9% of earnings above £33,795
- Plan 5 (2023 onwards): 9% of earnings above £25,000
- Postgraduate Loan: 6% of earnings above £21,000
These repayments stop automatically once your loan is fully repaid.
Our Student Loan Repayment Calculator can help you check your repayments.
Other Common Deductions
Attachment of Earnings is a court-ordered deduction for debts such as child maintenance or council tax arrears.
Union Fees are trade union membership subscriptions.
Give As You Earn (GAYE) is payroll giving to charity. This is deducted after tax, giving you tax relief automatically.
Season Ticket Loan is the repayment of an interest-free loan for annual travel passes.
Common deductions include Income Tax, National Insurance, pension contributions, student loan repayments, and other voluntary or court-ordered deductions. Check each one to ensure the correct amounts are being taken.
Net Pay
Net Pay is your take-home pay after all deductions. This is the amount that actually arrives in your bank account.
Payment Method is usually BACS (electronic bank transfer), though occasionally it may be cash or cheque.
If your net pay seems lower than expected, our why is my take-home pay lower than expected guide walks through the common causes.
Net pay is your take-home pay after all deductions. If it seems wrong, check your gross pay and deductions against your contract and payslip.
Year-to-Date Figures
Your payslip shows cumulative totals since the tax year started on 6 April.
Gross Pay YTD is your total earnings this tax year.
Tax YTD is the total Income Tax you have paid.
NI YTD is the total National Insurance you have paid.
Net Pay YTD is your total take-home pay.
Pension YTD is your total pension contributions.
These figures help you track your annual earnings and ensure you are not over-taxed.
Year-to-date figures show your cumulative earnings and deductions since 6 April. Use them to track your annual position and spot potential overpayments.
Common Payslip Problems
Several common issues can appear on your payslip. Understanding them helps you take action quickly.
Emergency Tax Code - If you see tax codes such as 1257L M1, 1257L W1, or BR, you are on an emergency tax code. This often means you are paying too much tax. Contact HMRC with your P45 from your previous employer to get the correct code. Our emergency tax codes guide explains how to spot and fix these codes.
Wrong Tax Code - Check your tax code matches your circumstances. The standard code for 2026/27 is 1257L. If you have multiple jobs, your second job often gets BR (basic rate, 20% on all earnings). If you receive the state pension, your code may be reduced to collect tax on the pension. Company benefits such as a car or medical insurance will also reduce your code.
Missing Hours or Pay - Compare your payslip to your employment contract, timesheets or rota, and any overtime you worked. Report discrepancies to your payroll department immediately.
Incorrect National Insurance Category - Most employees should be Category A. If you are Category C (over State Pension age) or B (married woman's reduced rate), check this is correct for your situation.
Common payslip problems include emergency tax codes, wrong tax codes, missing pay, and incorrect National Insurance categories. Check your payslip regularly and report errors promptly.
How to Check Your Payslip Is Correct
Following these steps helps you verify your payslip and spot errors early.
Step 1: Verify personal details such as your NI number, tax code, and employee number.
Step 2: Check gross pay matches your contract plus any overtime or bonuses.
Step 3: Calculate expected tax using our Income Tax Calculator.
Step 4: Verify National Insurance using our National Insurance Calculator.
Step 5: Check pension deductions match your scheme percentage.
Step 6: Confirm net pay equals gross pay minus all deductions.
Step 7: Keep all payslips for at least 6 years for tax records.
Check your payslip by verifying personal details, gross pay, tax deductions, NI contributions, pension deductions, and net pay. Keep payslips for at least 6 years.
What to Do if Something Is Wrong
If you find an error on your payslip, take action promptly.
For tax code issues: Contact HMRC on 0300 200 3300 or use your Personal Tax Account online.
For pay errors: Speak to your employer's payroll department with evidence such as your contract, timesheets, or previous payslips.
For pension issues: Contact your pension scheme administrator. Details are usually on your payslip.
For serious problems: If your employer will not fix errors, contact ACAS (Advisory, Conciliation and Arbitration Service) for free advice.
If you find an error, contact your payroll department, HMRC, or your pension provider. For serious issues, ACAS offers free advice.
Understanding Your Rights
Employers must provide payslips on or before payday, itemising all deductions. You are entitled to payslips even if paid in cash or below the tax threshold.
Keep payslips as proof of earnings for mortgages, loans, benefits claims, and tax returns. Your employer must correct any underpayments in your next pay period.
Employers must provide itemised payslips on payday. Keep payslips as proof of earnings for mortgages, loans, and tax returns.
Tax Year-End and P60
At the end of each tax year on 5 April, your employer must provide a P60 showing your total pay and deductions for the year. This document is needed for claiming tax refunds, proving your income for benefits or tax credits, applying for mortgages or loans, and completing Self Assessment tax returns.
Keep your P60 safe, as you can only get one copy per tax year.
For more on P60s, our what is a P60 form guide explains its importance. If you are comparing P45 and P60, our P45 vs P60 guide covers the differences.
Your P60 summarises your total pay and deductions for the tax year. Keep it safe for tax refunds, mortgage applications, and Self Assessment.
Leaving Your Job – P45
When you leave employment, you will receive a P45 within the tax year showing your total pay and tax paid in this job, your tax code, and your leaving date.
Give this to your new employer to ensure correct tax deductions. If you do not have a P45, your new employer will use an emergency tax code initially.
A P45 is issued when you leave a job. Give it to your new employer to avoid being placed on an emergency tax code.
Final Thoughts
Understanding your PAYE payslip empowers you to spot errors early, claim refunds promptly, and ensure you are receiving everything you are entitled to. Your payslip contains essential information about your earnings, tax deductions, National Insurance, pension contributions, and student loan repayments.
Check your payslip carefully every month. Verify your tax code, gross pay, and all deductions. Use our calculators to verify your figures. If numbers do not add up, do not hesitate to ask questions. It is your money.
Keep all payslips for at least 6 years as proof of earnings for mortgages, loans, benefits claims, and tax returns. At the end of the tax year, keep your P60 safe. When you leave a job, keep your P45 and give it to your new employer.
All information in this guide is based on official HMRC and GOV.UK sources. Readers should verify their tax code and deductions through their HMRC Personal Tax Account, as individual circumstances vary and rules may change after publication.
Written by
Daniel Reed
Daniel Reed writes about PAYE, payslips, tax codes, workplace deductions and take-home pay in the UK.
See more from Daniel Reed