Understanding Your UK Payslip
2 min read · Reviewed 14 August 2026
Payslips are full of codes and deductions that few people ever have explained to them. This guide walks through each part so you can check your pay with confidence.
Gross pay versus net pay
Your gross pay is what you earn before any deductions, the headline salary figure in your contract, divided across your pay periods. Your net pay, sometimes labelled "take-home", is what actually reaches your bank account after tax and other deductions have been taken off.
The gap between the two catches many people out. On a typical salary you might keep around three-quarters of your gross pay once Income Tax and National Insurance are removed, and less again after pension and any student loan repayments.
Your tax code and what it means
Your tax code tells your employer how much tax-free pay you are entitled to before Income Tax is deducted. The most common code is 1257L, which reflects the standard £12,570 Personal Allowance. The letter carries meaning too: L is the standard allowance, while codes like BR (basic rate on all income) or K (where deductions exceed your allowance) signal different situations.
If your code looks wrong, for example, if you are on an emergency code after starting a new job, you may be paying too much or too little tax. It is worth checking with HMRC, because an incorrect code is one of the most common reasons a payslip does not match expectations.
Income Tax and National Insurance lines
These are usually the two largest deductions. Income Tax is calculated on your pay above your tax-free allowance, using the banded rates of 20%, 40% and 45%. National Insurance is charged separately at 8% and then 2% across its own thresholds. They appear as distinct lines because they fund different things and are calculated in different ways.
Both are worked out for the pay period, so if your earnings vary month to month, through overtime or bonuses, these deductions will vary too.
Pension and student loan deductions
If you are enrolled in a workplace pension, your contribution is shown as a deduction, and your employer usually adds their own contribution on top. In most schemes your contribution is taken before tax is calculated, which slightly reduces your Income Tax.
Student loan repayments appear once you earn above the threshold for your plan type. They are a fixed percentage of income above that threshold, 9% for most plans, 6% for postgraduate loans, and stop automatically once the loan is cleared.
Checking your payslip is right
A quick way to sanity-check your payslip is to run your salary through a take-home pay calculator and compare the result with your net pay. Small differences are normal, because calculators use standard assumptions and cannot know every detail of your tax code or benefits. Large differences, though, are worth investigating.
Keep your payslips: they are proof of income for mortgages, rentals and benefits, and they let you spot errors early. Our salary calculator breaks your pay down into tax, National Insurance, pension and student loan so you can see exactly where each pound goes.
This guide is general information, not financial, tax or legal advice. Figures are estimates and can change. Always check GOV.UK or a qualified professional for your own situation.