Understanding your payslip
What you'll learn
Read a UK payslip and tell gross from net, and what each deduction is.
Your payslip shows two numbers that matter most: gross pay (what you earn) and net pay (what you keep). Everything in between is a deduction, and knowing what each one is stops payslip surprises.
The four things to find
- Gross pay - your full earnings before anything comes off.
- Income tax - taken via PAYE, based on your tax code.
- National Insurance (NI) - funds state benefits and your State Pension.
- Pension - your own contribution to a workplace pension, usually with an employer top-up.
What is left after these is your net pay, also called take-home.
A simple breakdown
| Line on payslip | What it means | Whose money |
|---|---|---|
| Gross pay | Total earnings before deductions | Earned |
| Income tax | Tax collected through PAYE | To HMRC |
| National Insurance | Contributions for state benefits | To HMRC |
| Pension | Saving for later life | Stays yours |
| Net pay | What hits your bank | Yours now |
Worth a quick check
- Confirm your tax code looks right; an error can quietly over- or under-tax you.
- Check pension contributions are going in if you expect them.
- Watch for one-off lines like overtime, bonuses or a student loan deduction.
Rates, bands and thresholds change each tax year, so treat the chart above as illustrative and check current figures on gov.uk.
Key takeaways
- Gross pay is what you earn, net pay is what you keep.
- Income tax and National Insurance both go to HMRC, but fund different things.
- A pension deduction is still your money, saved for later.
- Always sanity-check your tax code - mistakes are common and fixable.
Illustrative only: a made-up £2,500 gross month split into rough deduction buckets to show the shape, not real rates. Your actual figures depend on your tax code, pension and circumstances. Not a forecast.
Frequently asked questions
What is the difference between gross and net pay?
Gross pay is what you earn before anything is taken off. Net pay is what actually lands in your bank after tax, National Insurance and other deductions.
What is a tax code?
A short code from HMRC that tells your employer how much tax-free pay you get before income tax starts. If it looks wrong, contact HMRC, as an error can cost or overcharge you.
Is a pension deduction money lost?
No. A workplace pension deduction is your own money being saved for later, usually topped up by your employer and tax relief. It leaves your payslip but it is still yours.
General information, not financial advice. The value of investments can fall as well as rise, and figures and rules can change; check the current position before acting.