Check your pay by learning all you need to know about payslips


Gavin Randall

Every working adult who has worked for some time at some point must have either heard about and/or received a payslip. While some file them religiously, others probably don't have much of a clue what use they have outside of showing how much they made for the month. They are a significant part of employment which is evidence of the work that you've dedicated to your company at the end of every month. However, payslips have been and still are being misused and misidentified. So, how then do you know a payslip when you see one and what does it tell you? This guide aims to uncover the facts behind payslips; what payslips are, their importance, how to know if you have been paid correctly, whether they're useful when trying to get things like a payday loan, if deductions have been made the right way and the terms and abbreviations in a payslip. Hopefully, after reading this you will have a better understanding of what payslips are and how they work.

Why is my payslip so important?

First off by learning all you need to know about payslips you can check your pay. What else can they allow you to do? For one, your payslips can be used as proof of your earnings and you can see how much you gain month on month. On that note, money lending companies that give payday loans may ask for employee payment history which payslips are perfect for as they often require you to prove your earnings by showing your last three payslips. They are also important as they can be used as a determining factor in your credit limit and they're also a way of validating that you are actually employed in a reputable firm. Seeing as they contain your personal information about you and your finances, it is important to secure them to avoid identity fraud.

Wage packet

What exactly is a payslip?

A payslip is a document given to an employee by an employer. This document usually contains financial information on the employee relating to either their wages or salary. Typically, some of the things that you will find on a payslip include:

  • Money earned for a particular period
  • Tax deducted
  • Insurance paid
  • Other deductions such as pension contributions
  • National insurance number

You should also note that payslips don't always have to be on paper. They can also be provided in digital formats and can be sent to employees via email.

"Payslips can be a mystery but hold vital information on your finances"
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Calculator, pen and paper

What can I find on my payslip?

There are several things that you can find on a payslip and that an employer is obligated to include. Though it is important to obtain and check your payslip regularly, it is equally important you understand the content of the payslip. If you've seen one before, you've likely noticed that there are several terminologies and abbreviations on them that you may not understand. Some of the basic things that you're likely to find on your payslip include personal information such as your name and address, your employee or payroll number, the date, your NI number and the tax period. The employer is also expected to include certain items that you may find a little more complex on your payslip like:

One of the most common things that you're likely to see on your payslip is your gross pay. This refers to the total pay before the tax and national insurance has been deducted including both bonuses and commission. This is useful if you want to see how much you're paying in taxes. You should always cross-check to ensure you're being taxed the right amount.

Another thing you're likely to find on a payslip is the net pay. This is the residual amount you take home after deductions have been made. This figure can be used to help you plan your finances for the month and budget in order to avoid the need for cash advances. You should always check that this figure is correct and you aren't being under or overpaid.

It is possible that you have some deductions that aren't the same every month. These are typically categorised as variable deductions. A lot of the time, this includes taxes as well as National Insurance.

The opposite of variable deductions, fixed deductions are those that you can expect to occur every month and don't vary, for example if your gross pay does not change your student loan deduction will remain the same. Employers aren't obligated to give you details of what these deductions are for as long as they give you separate statement that discloses these details on an annual basis.

If you've seen what seems like a code made up of letters and numbers on your payslip, you've likely come across your tax code. The number in your code is representative of your tax free allowance or the amount you can earn before being taxed. It is important that you check this against your most recent tax code letter. This is key because if a wrong code is sent, you may end up paying more or less.

In the case that you've been paid anything extra, this is typically noted on your payslip. This could be in the form of overtime, tips, or bonuses which mandatorily have to be included in the gross pay figure.

Additional information may also show up on the payslip, although they are not mandatory such as your National Insurance number or pay rate - whether monthly, annually or hourly. Also, in some cases, your employer may pay part of your wages in cash and send the rest to your bank account. In such an instance, this has to be stated on the payslip.

How to work out your tax code

As promised, the aim of this guide is to help you understand your payslip better. Beyond the already mentioned, there is a lot of jargon on the payslip that may make understanding the content of a payslip a bit of a task. Some of that jargon includes tax codes which, as mentioned above, are usually a combination of a series of numbers preceded by a letter. You can work out your tax code using the following information:

  • BR - the basic rate of tax for a second job or pension
  • D0 - this is the tax code for the total income from a second job or pension taxed at the higher rate
  • D1 – is the tax code for all income from a second job or pension taxed at the additional rate
  • L – for all income taxed at the basic, higher and additional rates
  • M – for all income taxed at the basic, higher and additional rates when a spouse or civil partner has transferred over some of their personal allowances
  • N – for income that has been taxed at the basic, higher and additional rates when it is the employee that transferred some of their own personal allowances to a spouse or civil partner
  • NT – no tax deducted is usually for very specific cases like musicians who are regarded as self-employed and are therefore not subject to PAYE
  • S – for Scottish tax rates
  • T – for all income taxed at the basic, higher and additional rates, usually when HMRC needs to review some items with the employee


At times, there may be deductions on your payslip that you don't quite understand and quite a few are government related. For starters, one of the first deductions you may see is personal income tax. It is essentially a certain percentage of your income which is charged by either the Government on everything you earn. There are also NI contributions which are another Government-related contribution which you typically pay to the Government to be eligible for state pensions and other benefits over a long period of time. In addition to this, there are payments made to certain individuals from the Government that must appear in the payslip of such persons. Some of them include maternity, paternity and adoption pay which are typically given to parents who have a new baby and aren't working yet.

Student loan deduction

If you took out loans for university and haven't finished paying them off, this should also reflect on your payslip. HMRC (HM Revenue and Customs) notifies the Student Loans company on what has been repaid annually and they deduct accordingly. Most employers sum up the tax and deductions on the payslip, so it is important that you keep these documents for proof and ensure the right amount is being deducted. In addition to the mentioned, another deduction that you may see is a pension scheme and the amount being contributed by both the employer and the employee will reflect in the payslip.


If you do not understand any aspect of your payslip or you are uncomfortable with what you see in it, you can see someone in the payroll department of your company. Your access to payslips helps you plan your expenditure and your future, so it's imperative that you understand all of the information that they contain.

This guide is a quick walk through of some pretty complex stuff and is not meant to be taken as any form of tax advice. For more information the see

Making sure you understand the sections of your payslip and what all the codes and numbers mean is vital if you want to check you are being paid correctly. An error against you could result in you requiring a payday loan.