Advice:

Payslips contain lots of information which can be overwhelming at first but are important to understand. All employers are required to give employees a payslip showing your pay and deductions. This might be provided on paper or via an online platform. It’s a good idea to keep your payslips for up to six years if possible as you can be asked for them for various things.

What your payslip contains?

Your payslip must contain specific information, you can read about this on the ACAS website – www.acas.org.uk search “payslips”. It should include your employer’s details along with your name and payroll or employee number.

Your payment date and tax period:

You’ll also see lots of different numbers and codes. The payment date is when your pay will normally arrive in your bank account, it can be monthly or weekly and fall on any day of the month. Your payslip might also show a tax period (the tax year starts in April and ends in March). The number here corresponds to the period in which you’re being taxed, eg. if you’re paid monthly, 01 will represent the tax period in April, while 12 would mean March.

What is a National insurance number?

Your National Insurance (NI) number refers to your unique number and you need one to work in the UK.  It’s used to make sure all your NI contributions are recorded so you can get any state benefits you’re entitled to, including state pension later in life.

Who decides my Tax code?

Next is your tax code. This is decided by HM Revenue and Customs (HMRC) and is made up of several numbers and a letter. The numbers refer to how much tax-free income you get, while the letters mean different things depending on your circumstances. You can find out what they mean on the government website – www.gov.uk search “tax codes”.

When you start a new job it’s important to provide your employer with all the information they need to make sure your tax code is correct and to prevent you being put on an “emergency” code that ends with a W1, M1 or X and could see you initially paying more tax.

Your payslip will also show your total “gross” pay and deductions. “Gross” pay means how much you’ve earned before anything is deducted. It will usually itemise your “basic” pay and then any additional allowances, such as travel allowance. If you are paid by the hour, your payslip must show your hourly rate and how many hours you worked.  If you are an “irregular-hours worker” (search “irregular-hours worker” on the government website) your employer may have opted to include holiday pay with your normal pay – if so, this should be itemised separately.