A local expert from Citizen’s Advice provides timely tips on consumer issues.
Q: ‘I’ve just got my first payslip but I don’t understand what all the different sections refer to. How do I know if it’s correct?’
A: Your payslip shows your pay, deductions and tax information. All employers are required to give their employees a payslip and it’s a good idea to keep it for six years.
You’ll usually find your employer’s details in the top left corner of the payslip. Your details should be opposite this, in the middle or top right corner. This is also where you might find your payroll or employee number.
Next, you’ll see lots of different numbers and codes. The payment date is when your pay will normally arrive in your bank account – it can be weekly or monthly and fall on any day of the month. Your National Insurance (NI) number is unique to you, and you must have a NI number to work in the UK. It’s used to make sure all your NI contributions are recorded so you can get any contributory state benefits you’re entitled to, including state pension later in life.
Your payslip might show a tax period: the tax year starts on 1st April and ends on 31st March. The number here corresponds to the period in which you’re being taxed – so if you’re paid monthly, ‘01’ will represent the tax period in April, while ‘12’ would mean March.
Next is your tax code. This is decided by HM Revenue and Customs and is used by your employer or pension provider to work out how much Income Tax to take from your pay. Income tax is the tax you pay on your earnings to fund public services: the amount you have to pay will vary depending on your earnings. Your tax code is made up of several numbers and a letter. The numbers refer to how much tax-free income you will get. You can find out what the letters mean on the government website. Make sure you’re not on an emergency tax code otherwise you’ll pay too much tax.
Now, pay and deductions.
‘Gross pay’ means how much you’ve earned before anything is deducted. Deductions are amounts taken from your gross pay: common ones include income tax and national insurance, plus pension or student loan payments.
Most payslips will add up all the deductions from your pay into a single amount to make it easier for you to see how much is being deducted each month. Your ‘net pay’ is the amount of money you will receive after all the deductions have been worked out.
Lastly, taxable pay is the amount of your salary, to date in the current tax year, that has been subjected to tax. This will usually appear next to your net pay figure.
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