What Your Payslip Is Actually Telling You
A payslip is checked properly by very few people, and the deductions on it are where quiet errors accumulate.
The components
Gross pay, before any deductions, including basic pay plus any overtime, bonus or allowances shown separately.
Income tax, calculated by your employer according to a code supplied by the tax authority.
Social insurance or national insurance contributions, calculated on bands.
Pension contributions, which may be deducted before or after tax depending on the scheme, which affects the arithmetic.
Other deductions: student loan repayments, salary sacrifice arrangements, union subscriptions, charitable giving, season ticket loans.
Net pay, the figure that reaches your account.
Where errors occur
The tax code is the most common. An incorrect code produces over- or under-payment that accumulates all year.
Emergency codes applied when starting a job and never corrected.
Codes carrying adjustments for benefits you no longer receive, or for underpayments already settled.
Multiple employments, where allowances are allocated between jobs and frequently allocated wrongly.
Checking the code
Compare it against the standard code for your circumstances and against what the tax authority holds for you online.
Where it includes adjustments, check what they are for. The authority will explain on request.
Overpaid tax is refundable, frequently automatically at year end but sometimes only on request. Underpaid tax is recoverable from you, which is the reason to catch it early.
The pension line
Check the contribution percentage matches what you agreed and what the scheme requires for the employer to match fully. Contributing below the matching threshold forfeits free money.
Check the employer contribution appears where the payslip shows it.
Salary sacrifice arrangements change gross pay, which affects other calculations including some benefit entitlements and borrowing assessments.
Habit
Read the first payslip after any change — new job, pay rise, pension change, benefit change — and then one at the start of each tax year.
Keep payslips, since they are the evidence if a dispute arises and are frequently required for borrowing and rental applications.
Checking a pay rise or a bonus
The increase in net pay is always smaller than the increase in gross, and understanding why prevents unnecessary alarm.
A bonus paid in one month can be taxed as though it recurred, producing an apparent overdeduction that corrects over the following months.
Where it does not correct, contact the tax authority rather than waiting for year end.
Leaving a job
The final payslip should include accrued unused holiday, any outstanding expenses, and any contractual payments.
Check for deductions such as training cost recovery or overpayment recovery, which must generally have a contractual basis.
Keep the leaving documentation, since it is needed for the next employer to apply the correct tax treatment.
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