If you have just started working in the UK, your first payslip might be confusing. It may include many unfamiliar words and a lower amount than you expected. That is because part of your salary is automatically deducted for tax, National Insurance, and sometimes a pension or student loan.
This guide explains what each part of your payslip means, how deductions work, and how to make sure you are being paid correctly. It is written for people who are new to the UK job system or are not yet confident with English finance terms.
What Is a Payslip?
A payslip is a document that your employer must give you every time you are paid. It shows:
- How much you earned
- How much was taken out (deducted)
- What you are paid in the end (your take-home pay)
Payslips are usually given monthly or weekly. You may receive them on paper or by email.
Key Parts of a Payslip
Here are the most common sections on a UK payslip and what they mean:
1. Gross Pay
This is your total pay before any deductions. It includes:
- Your basic salary
- Overtime
- Bonuses or commissions
2. Tax Code
A code that tells your employer how much tax to take from your pay. Most people use 1257L, which means they can earn up to £12,570 a year before paying income tax.
If your code looks unusual (like BR or D0), it could mean you are on the wrong code.
👉 Check if your tax code is correct
3. Income Tax
This is the money you pay to the UK government. It is based on your earnings:
- 0% on the first £12,570 (your personal allowance)
- 20% on income up to £50,270
- 40% on higher amounts
The tax is deducted automatically.
4. National Insurance (NI)
This is a separate payment from tax. It helps fund healthcare, pensions and benefits.
In 2025, most employees pay:
- 8 percent on earnings between £12,570 and £50,270
If you earn less than £1,048 per month, you may not pay National Insurance.
👉 Learn more about NI classes and rates
5. Pension Contributions
If your employer offers a pension, they will take a small percentage of your pay to save for your future.
You may see:
- Employee contribution (from you)
- Employer contribution (extra, from your company)
Pension contributions reduce your taxable income — they are not a loss.
6. Student Loan Repayments
If you studied in the UK and took a student loan, you will begin repaying it once your income reaches a certain level.
You will only see this on your payslip if it applies to you.
7. Other Deductions
This could include:
- Union fees
- Company benefits (like bike-to-work or childcare schemes)
- Court orders (rare)
Each item should be labelled clearly.
8. Net Pay (Take-Home Pay)
This is the amount that goes into your bank account after all deductions.
It is the number to check when budgeting or planning expenses.
Example Payslip Breakdown
Here is a simple monthly payslip example for someone earning £2,500:
| Item | Amount |
|---|---|
| Gross pay | £2,500.00 |
| Income tax | £224.00 |
| National Insurance | £174.00 |
| Pension contribution | £100.00 |
| Net pay | £2,002.00 |
Common Questions
What if I think I am being overtaxed?
You may be on the wrong tax code. Contact HMRC or speak to your employer’s payroll team.
👉 Check your income tax online with HMRC
I just moved to the UK — why is my tax so high?
You might be placed on an emergency tax code. Once HMRC receives the correct information (e.g. from your P45 or starter form), your tax should adjust.
Do I have to join a pension?
Most employees are enrolled automatically, but you can opt out. Think carefully, it is often a good idea to stay in and benefit from employer contributions.
What does “year to date” mean?
It shows the total amounts you have earned and paid so far this tax year (April to March).
How to Keep Track of Your Deductions
- Save or download each payslip
- Use a spreadsheet or budgeting app to track net pay
- Check that your deductions look consistent each month
- Ask questions if something looks wrong
👉 Try a UK budget planner here
Final Thoughts
Understanding your UK payslip helps you take control of your finances. Even if the terms are unfamiliar at first, they will soon become part of your routine.
Know what to expect, check your net pay, and do not be afraid to ask questions, your payslip is your record, and it should always be clear.