UK Payslip Deductions Explained: Every Line on Your Wage Slip 2026/27

Anatomy of a UK Payslip

Every employee in the UK has a legal right to an itemised payslip, on or before payday. A compliant payslip must show your gross pay, the amount and type of any variable deductions, the net pay, and -- where relevant -- the number of hours worked if your pay varies with hours. Most payslips also show your name, payroll number, tax code, National Insurance number, the pay period and the payment date.

A typical slip is split into three blocks: earnings (what you are paid), deductions (what is taken off), and totals (net pay plus year-to-date figures). Understanding which block each line sits in -- and whether a deduction is taken before or after tax -- is the key to reading the document.

Deductions fall into two families. Statutory deductions are required by law: income tax, National Insurance and student loan repayments. Voluntary or contractual deductions are agreed between you and your employer: pension contributions, union dues, charitable giving and loan repayments. Both appear in the deductions block but are governed by different rules.

Gross Pay and Earnings Lines

Gross pay is the total of everything you earn in the period before deductions. The earnings block may list several lines:

• Basic pay: your contractual salary or hourly rate for the period.
• Overtime: additional hours, often at a premium rate, added to gross pay.
• Bonus or commission: performance pay, fully taxable through PAYE.
• Statutory pay: Statutory Sick Pay at GBP 123.25 per week, or maternity and paternity pay at GBP 194.32 per week, where applicable.
• Taxable benefits: the cash value of payrolled benefits such as a company car, added to taxable pay.

The gross figure is what your tax and National Insurance are calculated on (after any pre-tax deductions such as salary sacrifice). If your gross pay does not match your contract plus agreed extras, that is the first thing to query.

Income Tax (PAYE)

Income tax is collected through Pay As You Earn (PAYE). Your tax code -- usually 1257L for someone with the full GBP 12,570 personal allowance and no adjustments -- tells your employer how much tax-free pay to give you each period. The allowance is spread evenly across the year, so monthly-paid staff get roughly GBP 1,048 tax free per month.

Above the allowance, the rUK bands (England, Wales and Northern Ireland) apply: 20% on taxable income up to GBP 37,700, 40% from there to GBP 125,140, and 45% above. The higher-rate threshold is GBP 50,270 of total income. Scottish taxpayers (code prefix S) have different bands, starting at 19% and rising to 48%.

Because the standard code is cumulative, each period recalculates your tax based on total pay so far this year against total allowance so far. This means the system corrects itself: if you overpay in a high month, a quieter month gives some back.

National Insurance

Employee Class 1 National Insurance is charged at 8% on earnings between GBP 12,570 and GBP 50,270 a year, then 2% on earnings above GBP 50,270. Unlike income tax, NI is normally worked out per pay period in isolation rather than cumulatively. That means a single large bonus can briefly push a month into the 2% band, and a quiet month does not get the relief back.

Your employer also pays employer National Insurance at 15% on your earnings above GBP 5,000 a year. This is a cost to the employer and is not deducted from your pay, though some payslips display it for transparency. Salary sacrifice reduces both your own NI and the employer NI, which is why employers often promote sacrifice schemes.

Pension and Student Loan

Under auto-enrolment the legal minimum total pension contribution is 8% of qualifying earnings, made up of at least 3% from the employer and the balance from you (commonly 5%). Depending on the scheme this may be deducted before tax (net pay arrangement, giving full relief immediately) or after tax (relief at source, where the provider adds 20% basic-rate relief).

Student loan repayments are 9% of earnings above the plan threshold for Plans 1, 2 and 4, and 6% above GBP 21,000 for the Postgraduate Loan. The thresholds are GBP 26,900 (Plan 1), GBP 29,385 (Plan 2), GBP 33,795 (Plan 4) and GBP 25,000 (Plan 5). Like NI, the repayment is calculated per pay period, so overtime months cost more.

Year-to-Date Columns

The year-to-date (YTD) columns track running totals from 6 April. They are the engine of cumulative PAYE: tax this period is set so that total tax paid in the year matches total tax due on YTD taxable pay. Common YTD lines are gross pay, taxable pay, tax, National Insurance, pension and student loan.

At the end of the year your March payslip YTD figures should equal your P60. If they do not, raise it with payroll before the P60 is finalised. Keeping all twelve payslips makes it easy to reconstruct your year if HMRC queries your tax.

Worked Examples

Example 1 -- GBP 35,000 salary, monthly paid, code 1257L, no student loan.

• Gross monthly pay: GBP 35,000 / 12 = GBP 2,916.67
• Tax-free this month: GBP 12,570 / 12 = GBP 1,047.50
• Taxable pay this month: GBP 1,869.17, taxed at 20% = GBP 373.83 income tax
• NI: 8% of (GBP 2,916.67 - GBP 1,047.50) = 8% of GBP 1,869.17 = GBP 149.53
• Pension at 5% net pay arrangement on GBP 2,916.67 = GBP 145.83
• Net pay: approx. GBP 2,247.48

Example 2 -- the same employee receives a GBP 3,000 bonus in one month.

• Gross that month: GBP 2,916.67 + GBP 3,000 = GBP 5,916.67
• Taxable pay after monthly allowance: GBP 4,869.17, taxed at 20% = GBP 973.83 (still within basic band cumulatively for this salary level)
• NI: most of the bonus falls below the GBP 4,189 monthly upper threshold, so 8% applies to earnings to that point and 2% above; total NI rises sharply for the month
• Pension at 5% on the full GBP 5,916.67 = GBP 295.83
• The bonus is taxed at your normal marginal rates -- there is no special "bonus tax".

The bonus month looks heavily taxed because more of your pay sits above the monthly allowance, but over the full year the cumulative tax code ensures you pay the correct total. Use a take-home pay calculator to model your own figures.

Checking Your Payslip

A quick monthly check protects you from accumulating tax errors:

• Confirm the tax code matches your latest HMRC coding notice.
• Check gross pay equals contractual pay plus agreed overtime or bonus.
• Verify NI is 8% on earnings over the threshold for the period.
• Confirm the pension percentage and the correct student loan plan.
• Reconcile YTD figures against the previous payslip plus this period.

If something looks wrong, ask payroll first; tax code errors usually need an updated code from HMRC. This guide is general information, not financial or tax advice -- for your circumstances check gov.uk or speak to a qualified adviser.