Your payslip tells you how much you’ve been paid — but do you actually understand every line on it? For many employees, deductions like National Insurance, pension contributions, and student loan repayments appear as numbers without much explanation. This guide breaks down every component of a UK payslip in plain English.
What Every UK Payslip Must Include
UK law (the Employment Rights Act 1996) requires your employer to provide a written payslip containing gross pay, net pay, all variable deductions (tax, NI, student loan), fixed deductions, and hours worked if pay varies by hours. Use our salary calculator to check whether your take-home pay matches what you’d expect.
Understanding Each Payslip Deduction
Income Tax (PAYE)
| Tax Band | Income Range (2025/26) | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571–£50,270 | 20% |
| Higher Rate | £50,271–£125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
National Insurance (NI)
- 8% on earnings between £12,570–£50,270
- 2% on earnings above £50,270
Pension Contributions
Under auto-enrolment, minimum contributions are 5% from you and 3% from your employer. Always contribute enough to get the maximum employer match — it’s essentially free money.
Student Loan Repayments
| Plan | Repayment Threshold (2025/26) | Rate |
|---|---|---|
| Plan 1 | £24,990/year | 9% above threshold |
| Plan 2 | £27,295/year | 9% above threshold |
| Plan 4 (Scotland) | £31,395/year | 9% above threshold |
| Plan 5 | £25,000/year | 9% above threshold |
| Postgraduate | £21,000/year | 6% above threshold |
A Real Payslip Example
| Line Item | Amount | Notes |
|---|---|---|
| Gross Pay | £3,250.00 | £39,000/year ÷ 12 |
| Income Tax (PAYE) | −£437.80 | Based on 1257L code |
| National Insurance | −£228.38 | 8% on qualifying earnings |
| Pension (5% employee) | −£136.54 | Of qualifying earnings |
| Student Loan (Plan 2) | −£88.43 | 9% of earnings above £27,295 |
| Net Pay | £2,358.85 | Take-home after all deductions |
Payslip FAQ
What is a tax code and how do I check it’s correct?
Your tax code tells your employer how much of your income is tax-free. The most common code is 1257L. If yours is different, it may mean you have benefits in kind, multiple jobs, or HMRC thinks you owe unpaid tax. Check your code at gov.uk/check-income-tax — an incorrect code can cost you hundreds per year.
Can I reduce the tax I pay legally?
Yes. Salary sacrifice schemes (additional pension, cycle to work, EV car scheme) reduce your gross pay and therefore your NI and income tax. Contributing to a SIPP or claiming marriage allowance (if eligible) can also reduce your annual tax bill.
Related Calculators
- Salary Calculator — Estimate take-home pay at any salary level
- Percentage Calculator — Work out tax and deduction percentages
- Savings Calculator — Plan your savings from your net pay