As an employee, you will receive a payslip every month which outlines your earnings and deductions for that period. There’s quite a lot of information on your payslip, so it’s important to understand it so you can ensure you’ve been paid correctly, as well as know how to identify any issues that may need addressing with your employer.
There’s 11 things on your payslip you need to pay close attention to, so keep reading as we help you understand your payslip better.
What’s On My Payslip and What Does It Mean?
Understanding your payslip is very important should you receive one from your employer or company and the information it contains could prove important if you need to apply for a mortgage or even move jobs. Understanding everything from your payroll number to your tax code is important for everyone, from CEO to junior employee.
Companies that offer payroll software in the UK include:
Personal Details
The top of your payslip will usually display your personal details such as your name, address, National Insurance number, and tax code. Make sure that these details are correct and up to date. Any discrepancies should be reported to your employer as soon as possible.
Payment Period
Your payslip will also show the payment period that it relates to. This will usually be a calendar month, but it could also be a week or a fortnight depending on your company’s payroll system.
Gross Pay
This is the total amount of money you have earned before any deductions. It will include your basic pay, any overtime, bonuses, or commission payments you have received for that period.
Tax Deductions
The amount of tax you pay depends on your income and tax code, which is based on your personal allowance and any other allowances you are entitled to. Your payslip will show your taxable pay, the tax you have paid for that period, and the tax you have paid since the start of the year. If you think you are paying too much or too little tax, you should check your tax code with HM Revenue and Customs (HMRC).
National Insurance Contributions
National Insurance Contributions (NICs) are paid by both employers and employees and go towards state benefits such as the state pension, maternity pay, and sick pay. Your payslip will show the amount of NICs you have paid for that period and the total amount you have paid since the start of the tax year. If you have overpaid NICs, you may be entitled to a refund.
Pension Contributions
If you are enrolled in a workplace pension scheme, your payslip will show the amount of pension contributions you have paid for that period. You should check that you are paying the correct amount into your pension scheme and that your employer is also contributing their fair share.
Other Deductions
Your payslip may show other deductions such as student loan repayments, childcare vouchers, or charitable donations. Make sure that these deductions are correct and that you have authorised them.
Net Pay
This is the amount of money you have left after all deductions have been made. This is the amount that will be paid into your bank account when payday comes around.
Year-to-Date Figures
Your payslip will slow the year-to-date figures for your gross pay, tax, NICs, and pension contributions. These figures can help you to check that you have been paid correctly over the course of the tax year.
Tax Code
Your tax code is used by your employer to calculate how much tax should be deducted from your pay. It is based on your personal allowance and any other allowances you are entitled to. If you have more than one job, your tax code may need to be adjusted if you receive any benefits such as a company car or medical insurance. If you think your tax code is wrong, you should contact HMRC.
National Insurance Number
Your National Insurance (NI) number is a unique reference number that is used to record your NI contributions and to ensure that you receive the correct benefits. It is made up of two letters, six numbers, and a final letter. You should keep your NI number safe and secure and make sure that you quote it directly to your employer.
