How to read your payslip and tax code
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A payslip is a record of what your employer says it paid and deducted for a pay period. It is more useful than a single net-pay number because it lets you trace earnings, PAYE tax, National Insurance, pensions and other deductions. Your tax code tells payroll how to handle certain Income Tax allowances and adjustments; it is not a final verdict on your total tax bill.
This guide shows what to check when the bank transfer differs from your expectation. Payslip formats vary between employers, and unusual codes or multiple jobs may need individual HMRC guidance. Use current official explanations rather than guessing from a letter or number.
Start with identity and pay period
Check your name, employer, payment date and period. A payslip may show basic hours, overtime, bonuses and other earnings separately. Add those lines to see gross cash pay, then distinguish taxable gross pay or NI-able pay if those are reported separately. Different bases can be correct where benefits or pension methods apply.
If you started or left partway through a period, salary may be pro-rated. An overtime payment might appear one period after the work. Reimbursements and benefits may be displayed differently from ordinary wages. Before challenging the net figure, make sure the expected gross figure refers to the same dates and hours as the payslip.
Read PAYE and the tax code
PAYE Income Tax is normally withheld by the employer using the tax code supplied or applicable starter procedure. A common code incorporates an allowance, but codes can contain adjustments and special letters. Codes may also be operated on a non-cumulative basis for a time. Never assume a particular code is universally correct for everyone earning the same salary.
Compare the code on the payslip with HMRC’s record and any notice you received. If it changed, check whether a benefit, second job or prior-year underpayment is reflected. HMRC’s official tax-code checker explains code components. Payroll generally applies the code it is instructed to use, so a dispute about the allowance may need HMRC rather than only your employer.
Identify NI and pension entries
Employee National Insurance is shown separately from PAYE. Its category letter and earnings-period basis matter; a monthly NI figure cannot always be reproduced by applying an annualised percentage to annual salary. Employer NI, if shown for information, is not normally taken from your contracted gross salary.
A workplace pension line might represent an employee contribution under relief at source or net pay, or you might see a reduced contractual salary under salary sacrifice. The apparent cash deduction and tax treatment differ. Ask the scheme or payroll which method is used before concluding a pension contribution has been missed.
Reconcile the totals and act on errors
Start from gross cash earnings and subtract the listed employee deductions to reach net pay; account for any non-taxable payments or adjustments. Check the year-to-date section when a single month looks unusual, as a cumulative PAYE correction can be visible there. Student loans, attachment orders and other authorised deductions should each have an identifiable line or explanation.
Keep the payslip and compare it with the payment actually received. Ask payroll for a breakdown if gross hours or deductions are unclear. For a suspected tax-code issue, use HMRC’s official service. A take-home pay calculator is a helpful independent sense-check but cannot see prior payroll submissions, benefits or a live HMRC instruction.
Worked example: reconcile a payslip
Imagine a payslip with £2,800 basic pay plus £200 overtime, making £3,000 gross cash earnings. It lists £320 PAYE, £140 employee NI, £100 pension and £50 student loan deduction. Assuming no other adjustments, net pay is £3,000 − £320 − £140 − £100 − £50 = £2,390.
These are illustrative payslip entries, not claimed 2026/27 statutory rates. If the bank payment is £2,410 instead, look for a £20 reimbursement, correction or omitted line before assuming the tax calculation is wrong. Also check whether the pension and student loan figures relate to the same pay period.
Frequently asked questions
Does a tax code state my final tax liability?
No. It directs PAYE withholding and may be updated as HMRC receives information.
Why is taxable pay different from gross pay?
Pension arrangements, benefits and other adjustments can produce different payroll bases.
Who fixes a wrong tax code?
Check HMRC’s tax-code service; payroll normally follows the code provided under PAYE rules.
Official sources
Check the linked official guidance for the latest figures before making a decision.
Related calculators
UK Calculators is independent and not affiliated with or endorsed by HMRC or any UK government body. These examples are illustrative, not personal tax, financial or legal advice.
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