How to read your payslip, line by line

Published 2026-08-29, checked against current rates 2026-08-28.

A UK payslip has to show your gross pay, every deduction, and the net amount being paid to you. Most also carry a tax code, a National Insurance letter, and year-to-date totals that matter more than people realise, because they are what HMRC actually reconciles against. This guide walks through every line using a worked example: £36,000 a year in England on the 2026/27 rates (checked 2026-08-28), paid monthly, with a 5% workplace pension and a Plan 2 student loan. That produces a gross of £3,000.00 a month, deductions of £716.31, and net pay of £2,283.69. Once you can find those four numbers on your own payslip, the four checks at the end of this guide will catch most of the payroll errors that cost people money.

The tax code is the line most likely to be wrong, and the one people skip over. Paste yours in and see exactly what it is telling your employer to do.

Decode your tax code

The payments side

The left or upper half lists what you earned this period.

Basic pay. Your salary divided by the number of pay periods. £3,000.00 here. Hourly staff see rate multiplied by hours instead.
Additions. Overtime, bonus, commission, shift allowance, holiday pay. All taxable, and a bonus in a single month can push that month into a higher band even when the annual figure would not.
Gross pay. The total of the above before anything is removed.
Taxable pay. Often lower than gross, because pension contributions under a net pay arrangement or a salary sacrifice are removed before tax is worked out. If these two lines are identical and you pay into a pension, your scheme is relief at source and you may have higher-rate relief to claim.

The deductions side

Example monthly payslip deductions on a £36,000 salary
Line	This month	What it is
PAYE income tax	£360.50	Set by your tax code and cumulative for the year
National Insurance	£156.20	Per period, never reconciled annually
Student loan	£49.61	9% above the plan threshold
Pension	£150.00	Your contribution, not your employer's
Net pay	£2,283.69	What reaches your bank

Your employer's own National Insurance contribution may also be shown. It is not deducted from you: it is a cost they pay on top, and it appears for information only. The employer cost calculator shows the full figure a job costs a business.

The codes and reference numbers

Tax code. 1257L is the standard code for 2026/27, meaning a full personal allowance of £12,570. Letters that follow change the meaning: S for Scotland, C for Wales, BR for basic rate on everything, and a W1, M1 or X marker for a non-cumulative emergency code.
National Insurance letter. Most employees are category A. Different letters apply over state pension age, for certain apprentices and for veterans, and they change what is deducted.
Payroll and NI numbers. Your NI number follows you between jobs and is how HMRC matches this pay to you. Check it is correct: a wrong one means your contributions may be credited to nobody.
Year to date. Cumulative gross, tax, NI and pension since 6 April. These are the numbers your P60 will repeat, and the ones to check if you think you have overpaid.

Four checks worth doing today

Does the tax code match your situation? If it is not 1257L and you have one job and no taxable benefits, find out why. Run it through the tax code checker first.
Does net pay match an independent calculation? Put your salary into the take-home pay calculator. A gap of a few pounds is rounding; a gap of tens or hundreds is a question for payroll.
Is a student loan being taken that should not be? Deductions should stop once the balance is cleared, and they should never start below your plan threshold. Repayments on the wrong plan are common after changing jobs.
Are the year-to-date figures continuous? If you changed jobs and your new employer did not receive your P45, your YTD may have restarted, which usually means you are being overtaxed. The tax refund calculator estimates what you are owed.

How long should I keep payslips?

HMRC asks individuals to keep records for at least 22 months after the end of the tax year they relate to, and longer if you file a self-assessment return. In practice, keep the P60 for each year permanently: it is the single document that proves what you earned and paid, and it is what mortgage lenders and HMRC both ask for. Payslips themselves matter most in the year they are issued, when an error is still easy to correct.

Sources

Every figure on this page is computed from those tables at build time, checked 2026-08-28. If a number here ever disagrees with gov.uk, gov.uk is right and this is a bug worth telling us about. See our corrections policy.

Related guides

Emergency tax codes and how to fix them

W1, M1, X, BR and 0T. What each one does to a payslip, how much it costs, and how to get the overpayment back.

How to calculate take-home pay by hand

Five steps, in the order payroll does them. Follow it once and every payslip you ever get will make sense.

All 10 guides are listed on the guides index, and every calculator on the home page.