Office life 101: Understanding your Payslip
No matter if you’ve just received your first payslip or this is the 150th, understanding what each section means and how your pay works is incredibly important. Either in a paper or electronic format, your payslip contains a number of essential pieces of information including your national insurance number, gross and net pay, tax codes and more. In this useful guide, we take you through what each section means for you.
What will be detailed on your payslip?
Your payslip must contain the following information:
- Gross pay (your full pay before any deductions)
- Your net pay (what you take home after deductions)
- The amount of any deductions, for example, National Insurance
- The amount and method for any part payments
- The hours on your payslip if your pay varies by the amount of time you’ve worked
Your employer may choose to add additional information to your payslip which they aren’t required to, such as:
- Your tax code
- National Insurance Number
- Your pay rate (annual or hourly)
- Additional payments such as overtime or bonuses
What does each section mean?
Navigating each section can be complicated, especially if this is your first payslip. Nevertheless, it’s important you understand each part should you need to ever question your employer over it.
- Tax code – This code tells your employer what rate you should be taxed at. To find out how much you can earn a year before you’re taxed, simply add a 0 to the number shown. So, if your code reads 1000L, you can earn £10,000 a tear before paying any income tax.
- Gross pay – This is what you’ve earned before any deductions have been taken off.
- Net pay – This is the amount you’ll receive in your bank once all the deductions have been taken off.
- Payment method – The majority of employers will pay your monies into your bank account. This is called Banker’s Automated Clearing Services or BACS.
What to do if something doesn’t add up?
Don’t be afraid to approach your Payroll department or HR if something doesn’t look right on your payslip – they’re here to help and answer any questions you may have. It’s good to get into the habit of checking your payslips regularly to ensure everything adds up to what you expect; for example, checking your student loan deductions, your tax and National Insurance are correct.
This will help you to pre-empt any financial problems you may not be expecting. For example, if you are waiting on a tax rebate or are struggling and need to find alternative financial assistance to help cover some payments, there are a number of routes you can explore.
**Disclaimer: this post is in collaboration.
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