In a recent government survey, it was revealed that almost one in five young workers (aged 16 to 24) and one in 10 older workers (aged 25-34) do not receive a payslip.
But new rules introduced in April this year mean that all workers are now entitled to a payslip – whether it’s given to you on paper, by email or accessible via a website. Your payslip must also now show hours where the pay varies by the amount of time worked.
Understanding your payslip isn’t always easy though. In fact, according to the survey, although 99% of workers who received and checked their payslip understood at least some of it, only 62% understood all of it.
Below, we take a look at the information on your payslip so you can better understand what it means and make sure you’re being paid correctly. If you have any concerns about your payslip, speak to the payroll department at your company.
Payslips vary from company to company, but all payslips must show the following:
- Gross pay: this is your full pay before any tax or National Insurance has been deducted
- Net pay: the amount you take home after deductions have been taken off
- Variable deductions: these are deductions that could change each payday, such as tax and National Insurance (NI). Your payslip should show how much these are
- Fixed deductions: these are the deductions that remain the same each payday, such as a season ticket loan. Your employer doesn’t have to say what they are, but it will need to provide a separate statement with full details at least once a year
- Part payments: if you have received a cash payment and a bank account payment, this will need to be highlighted
- Hours worked: as mentioned above, your payslip must now show hours where the pay varies by the amount of time worked
You might also find some of the following information on your payslip:
- Your payroll number: some companies will use a payroll number to identify people on their payroll
- The tax period: you may see a number that represents the tax period for that payslip - so if you are paid monthly, 01 would mean April as it’s the start of the new tax year, 02 would mean May, and so on
- Your tax code: this shows the rate you’re taxed at and is worth checking as if it’s wrong, you could be paying too much or too little tax (see more on tax codes below)
- Date: the date your pay is credited to your account
- Your National Insurance number: you need a NI number to work in the UK and you keep the same number throughout your working life. The tax you pay through it contributes to state benefits such as the State Pension and the NHS
- Pension contributions: if you pay in to a workplace pension, the amount you’re paying will be shown here. If your employer contributes too, that amount might also be displayed
- Expenses: your employer may list out any expenses you are owed via the payroll
- Student loan: if you are paying off a student loan, the amount deducted will be shown here
- Workplace benefits: this includes benefits such as health insurance or childcare vouchers
- Bonus or commission: if you receive any payments on top of your salary, such as bonuses, commission or overtime, this will be shown here
- Sick pay: you are entitled to Statutory Sick Pay (SSP) if you are off sick for four consecutive days or more and you meet certain conditions. You may also receive occupational sick pay
- Maternity or paternity pay: if you have recently had a baby you’ll receive Statutory Maternity Pay (SMP) or your company may pay enhanced maternity pay. If you’re a new father, you’ll get Statutory Paternity Pay (SPP). If parents share time off, this section will also show Shared Parental Pay (ShPP). If you have adopted a child, you’ll receive Statutory Adoption Pay (SAP).
- Court orders and child maintenance: if a court has ordered deductions from your pay to cover fines or debt repayments, this may also be on your payslip. Child Maintenance Service can also request that deductions are made for child maintenance
Your tax code is usually the amount you can earn without paying tax minus a zero, followed by a letter – the most common letter is L.
So if you had the tax code 1250L this would mean you could earn £12,500 before paying tax.
You can see a full list of the letters on the gov.uk site.
If you think your tax code is wrong, you will need to contact HMRC on 0300 200 3300. If you think you’re entitled to a tax refund, you can make a claim on the gov.uk site.
Some of the abbreviations you might find on your payslip include:
- BACS – Bankers Automated Clearing Services: an electronic payment scheme
- BA – Bereavement Allowance: an allowance given to widowers or surviving civil partners
- CHB – Child Benefit: for parents with children under 16
- CTC – Child Tax Credits: for parents with children under 16
- NI – National Insurance: a tax you pay to contribute to state benefits
- PAYE – Pay As You Earn: a tax deduction taken by HMRC
- Pension EE: employee’s pension contribution
- Pension ERS: employer’s pension contribution
- SAP – Statutory Adoption Pay: paid to parents on leave after adopting a child
- ShPP – Shared Paternity Pay: paid to parents sharing time off after having a child
- SMP – Statutory Maternity Pay: paid to mothers on leave after having a child
- SPP – Statutory Paternity Pay: paid to fathers on leave after having a child
- SSP – Statutory Sick Pay: paid to employees who are absent from work due to illness
- YTD – Year to Date: covering the amount of pay you’ve earned during the current tax year