TL;DR
- Almost everyone at work has a legal right to a payslip. GOV.UK says an employer "must provide you with a payslip", that payslips "must be provided on or before payday", and that they must show "your earnings before and after any deductions".
- Net pay is one sum: gross pay, minus deductions taken before tax, minus income tax and National Insurance, minus deductions taken after tax. Where a deduction sits in that order changes how much it costs you.
- A deduction needs authority behind it, from the law, the contract or your written agreement, and GOV.UK says it "cannot normally reduce your pay below the National Minimum Wage even if you agree to it".
A payslip is the only document most of us get every month that says what our work was worth and what happened to it. Most people read the last number and stop. The lines above it are where the questions live: why the tax changed this month, what the letter next to National Insurance means, why the pension figure is not the percentage you expected.
This article walks down a payslip line by line, sets out the gross to net sum as a formula with a worked example, explains the difference between a deduction taken before tax and one taken after, and says what an employer may and may not take off your pay.
Pay questions usually reach someone in HR before they reach payroll, and they stall when nobody owns the next step. See how New Dynamics workflows give each step an owner and a due date. New Dynamics does not run payroll, so this article is general background rather than product documentation.
It is also general information rather than tax or legal advice. The rules quoted below are the published UK rules; an individual case can turn on facts a web page cannot see.
Pay stub, paycheck, payslip: one document, three words
Say this once and it stops being confusing. Pay stub, paystub and paycheck stub are American words. In the UK the same piece of paper is a payslip, and in law an itemised pay statement. If you searched for a pay stub and landed here, you are looking for a payslip: the layout is broadly the same idea, a gross figure at the top, deductions in the middle, a net figure at the bottom, but the deductions themselves are UK ones. This article is written for the UK and answers the American phrasing as it goes.
Your legal right to an itemised payslip
Start with the right, because it decides what has to be on the page.
GOV.UK's guidance on payslips states that "your employer must provide you with a payslip", unless you are "not an employee or 'worker'", in the police service, a merchant seaman or a share fisherman. Payslips "must be provided on or before payday". They must show:
- "your earnings before and after any deductions";
- "the amount of any deductions that may change each time you're paid, for example tax and National Insurance";
- "the number of hours you worked, if your pay varies depending on time worked".
Deductions that never change, a season ticket loan repayment for instance, get slightly softer treatment. GOV.UK says employers "must also explain any deductions fixed in amount, for example repayment of a season ticket loan", and "can choose to do this either on a payslip, or in a separate written statement", which must reach you before the first payslip and be updated once a year. Format is the employer's choice too: they "can choose whether they provide printed or electronic (online) payslips".
Acas puts the same duty in terms of the statute. Its guidance on payslips says that "by law (Employment Rights Act 1996), employers must give all their employees and workers payslips from their first payday", and that a payslip must include "the 'gross amount' - this is the total pay before deductions" and "the 'net amount' - this is the total pay after deductions".
A payslip line by line
Gross pay
Everything you earned in the period, before anything comes off: salary or wages for the period, plus overtime, commission, bonus, holiday pay and statutory payments such as sick pay or maternity pay. Gross pay is the figure percentages are usually calculated from, which is why it matters that it is right before you check anything below it.
Income tax
Collected through PAYE and worked out from your tax code. GOV.UK's guide to income tax rates and Personal Allowances states that "the current tax year is from 6 April 2026 to 5 April 2027" and that "the standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on". For England, Wales and Northern Ireland the bands above it are 20% from £12,571 to £50,270, 40% from £50,271 to £125,140 and 45% over £125,140. The same page notes that "income tax bands are different if you live in Scotland".
PAYE is normally cumulative, which explains the single most common payslip surprise: the tax line is not a twelfth of your annual bill in isolation, it is whatever brings your tax paid so far into line with your pay so far. A pay rise, a bonus, a late start in the tax year or a corrected tax code all move it.
National Insurance
A second deduction with its own thresholds and its own rates. GOV.UK's page on National Insurance rates and categories gives employee rates for 6 April 2026 to 5 April 2027 against three weekly earnings bands, and its own worked example for the most common category: "if you're in category A and you earn £1,000 in a week you'll pay: nothing on the first £242; 8% (£58) on your earnings between £242.01 and £967; 2% (£0.66) on the remaining earnings above £967."
Two points follow. National Insurance is charged on the pay in that period, not cumulatively, so an irregular month can cost more National Insurance than the same money spread evenly. And it stops counting your personal allowance entirely: the tax-free amount for National Insurance is not the £12,570 you may have in mind.
Pension
If you were enrolled automatically, GOV.UK's page on what you, your employer and the government pay sets the minimums: you pay 5%, "the minimum your employer pays" is 3%, and the "total minimum contribution" is 8%. Those percentages are not applied to all your pay. They are "based on your total earnings between £6,240 and £50,270 a year before tax", which is why 5% of gross pay and the number on your payslip often differ.
Student loan
Repayments appear as a separate line, usually with a plan number. GOV.UK's page on what you'll pay says you repay "9% of your income over the threshold if you're on Plan 1, 2, 4 or 5" and "6% of your income over the threshold if you're on a Postgraduate Loan plan". Each plan has its own threshold, listed on that page by year, month and week. The thresholds change, so check the live page rather than a figure you remember.
Other deductions
Anything else your employer has authority to take: trade union subscriptions, a season ticket or salary advance repayment, cycle to work payments, payroll giving to charity, a salary sacrifice arrangement, or an attachment of earnings order where a court has told your employer to pay part of your wages to someone else. Each should be named. A line labelled only "other" is a reasonable thing to query.
Net pay
What reaches your bank account, also called take-home pay. The payslip usually also shows how it was paid and into which account, often with the last digits of the account number.
Year to date, your tax code and your NI category
Three things near your name do more work than they look.
Year to date. Running totals since 6 April for gross pay, tax, National Insurance and often pension. This is where you check the year rather than the month: if your year-to-date gross looks wrong, a single month's figure will not tell you why.
Tax code. GOV.UK's tax codes guide says your tax code "is used by your employer or pension provider to work out how much Income Tax to take from your pay or pension", and that you can find it on your payslip. Its page on what your tax code means explains that "the numbers in your tax code tell your employer or pension provider how much tax-free income you get from them in that tax year". The common code is 1257L, matching the standard Personal Allowance, where L means "you're entitled to the standard tax-free Personal Allowance". Other letters say something specific: BR means "all your income from this job or pension is taxed at the basic rate", D0 the higher rate, D1 the additional rate, NT that "you're not paying any tax on this income", and 0T that "your Personal Allowance has been used up, or you've started a new job and your employer does not have the details they need to give you a tax code". M and N cover a Marriage Allowance transfer received or given. W1, M1 and X mark an emergency code, which treats each period in isolation rather than cumulatively.
National Insurance category letter. A single letter that tells payroll which National Insurance rates to apply to you. GOV.UK lists categories A, B, C, D, E, F, H, I, J, K, L, M, N, S, V and Z. Most employees are category A. The letter is set by circumstances such as age or a particular employment status, so if yours changed without explanation it is worth asking why.
Gross to net, as a formula
The arithmetic never changes, whatever the payslip looks like:
Net pay = gross pay, minus deductions taken before tax, minus income tax, minus National Insurance, minus deductions taken after tax.
Here is that sum worked through for one week. The figures below are an example chosen to match GOV.UK's own published National Insurance example, not a benchmark and not your payslip.
| Line | Amount | Where it comes from |
|---|---|---|
| Gross pay | £1,000.00 | the week's earnings in this example |
| Pension, 5%, taken before tax | £50.00 | 5% of gross pay under the scheme in this example |
| Taxable pay | £950.00 | gross pay minus the before-tax deduction |
| Tax-free pay for the week, code 1257L | £241.73 | one fifty-second of the £12,570 Personal Allowance |
| Income tax at the basic rate | £141.65 | 20% of the £708.27 that is left |
| National Insurance, category A | £58.66 | nothing on £242, 8% to £967, 2% above, per GOV.UK |
| Student loan, Plan 2, 9% | £39.15 | 9% of pay above the weekly Plan 2 threshold |
| Net pay | £710.54 | gross pay minus every deduction above |
The student loan line uses the weekly Plan 2 threshold as GOV.UK lists it, £565. That page gives its thresholds as current figures without naming a tax year, and they change each April, so check it before you rely on it.
Two honest caveats. Payroll software uses HMRC's own tables and rounding rules, so the real pennies can differ by a little. And because PAYE is cumulative, a week in isolation is a simplification: over a full year the tax line settles against your total pay.
A deduction before tax, and the same deduction after
This is the distinction worth understanding, because it decides what a given pound actually costs you.
Before tax. The deduction comes off first, so your taxable pay is lower and your income tax is lower. Pension contributions under a net pay arrangement work this way, as does payroll giving to charity. You give up a pound of gross pay and your take-home falls by less than a pound, because some of that pound would have gone in tax anyway.
After tax. Income tax and National Insurance are worked out on the full amount first, and the deduction comes out of what is left. Trade union subscriptions, season ticket loan repayments and attachment of earnings orders normally sit here. A pound deducted is a pound of take-home gone.
Salary sacrifice sits firmly in the first group, and for a reason worth stating precisely: it does not deduct from your pay, it reduces the pay you are entitled to. HMRC's guidance on salary sacrifice for employers defines it as "an agreement to reduce an employee's entitlement to cash pay, usually in return for a non-cash benefit". Because the entitlement itself is smaller, there is less pay for income tax and National Insurance to apply to. That is also why it is not a casual change: an employer sets one up "by changing the terms of your employee's employment contract", the employee "needs to agree to this change", and each opt in or out means altering the contract again.
The same page sets the floor: a salary sacrifice arrangement "must not reduce an employee's cash earnings below the National Minimum Wage (NMW) rates".
What an employer may and may not deduct
A deduction needs authority behind it. GOV.UK's guidance on deductions from your pay states that "your employer is not allowed to make deductions unless: it's required or allowed by law, for example National Insurance, income tax or student loan repayments; you agree in writing; your contract says they can; there's a statutory payment due to a public authority; you have not worked due to taking part in a strike or industrial action; there's been an earlier overpayment of wages or expenses; the court has told your employer to take debt payments."
Then the floor. The same page says a deduction "cannot normally reduce your pay below the National Minimum Wage even if you agree to it", and lists the exceptions: tax or National Insurance, "something you've done and your contract says you're liable for it, for example a shortfall in your till if you work in a shop", repayment of a loan or advance of wages, repayment of an accidental overpayment, buying shares in the business, employer-provided accommodation, and deductions for your own use such as union subscriptions or pension contributions.
For the rate that floor sits at, GOV.UK's National Minimum Wage rates page gives the figures that apply from April 2026: "21 and over: £12.71", "18 to 20: £10.85", "Under 18: £8" and "Apprentice: £8". The page notes that "the rates change on 1 April every year".
There is one sector-specific cap worth knowing. Where retail shortfalls are being recovered, GOV.UK says "your employer cannot take more than 10% from your gross pay (pay before tax and National Insurance) each pay period to cover any shortfalls".
Our post on payroll deductions takes the lawfulness question further, including the closed list of grounds and the rules on tips. For the pay run these lines are produced by, see what payroll is, and for what an employer has to keep afterwards, payroll records.
Which rules apply where you live
Income tax, National Insurance, student loan repayments and the National Minimum Wage are set UK-wide, with one significant exception: income tax bands and rates differ in Scotland, as GOV.UK states on its income tax page, so a Scottish taxpayer's code normally begins with S.
Northern Ireland is worth a separate note. The tax figures above apply there as they do in England and Wales, but employment rights sit in separate Northern Ireland legislation rather than the Employment Rights Act 1996, and the advisory body is the Labour Relations Agency rather than Acas. If you work in Northern Ireland, check Northern Ireland guidance before relying on the procedural route below.
When a payslip is wrong
Most payslip errors are data errors, not disputes, and they are fixed fastest by saying so early.
- Check the gross figure first. Hours, overtime, a missed bonus, a rate change applied a month late. If gross pay is wrong, every percentage below it is wrong too.
- Check the codes. A changed tax code or National Insurance category letter explains a lot of unexpected movement. Your tax code is HMRC's to correct rather than your employer's; your employer applies the code it is given.
- Ask payroll, in writing, with the payslip attached. Acas advises speaking to "their manager, payroll team or employer as soon as possible", and the same applies if no payslip arrived at all.
- Escalate if the informal route fails. Acas says an employee can "raise a grievance" and, if that does not resolve it, make a claim to an employment tribunal. Tribunal time limits are short, so take advice early rather than late.
One related duty cuts both ways: Acas's guidance on deductions from pay and wages says "deductions must be clearly stated in a worker's payslip", and that "before making deductions that a worker does not expect, an employer should notify the worker as soon as possible". A surprise on a payslip is usually a communication failure before it is a legal one.
Frequently asked questions
What is a pay stub?
A pay stub is the American name for a payslip: the written statement of what you earned in a pay period and what was taken off it. The UK legal term is an itemised pay statement. GOV.UK says your employer "must provide you with a payslip", and that payslips "must be provided on or before payday".
What does a payslip have to show?
Your earnings before and after any deductions, the amount of any deduction that may change each time you are paid such as tax and National Insurance, and the number of hours you worked if your pay varies depending on time worked. Deductions fixed in amount can be explained in a separate annual written statement instead.
How do you work out net pay?
Take gross pay, subtract deductions made before tax, work out income tax and National Insurance on what is left, then subtract deductions made after tax. What remains is net pay. The order matters, because a deduction taken before tax also reduces the amount your tax is calculated on.
What is a pre-tax deduction?
One taken from pay before income tax is worked out, so it reduces your taxable pay as well as your take-home pay. Pension contributions under a net pay arrangement and payroll giving work this way, and so does salary sacrifice, which reduces your entitlement to cash pay rather than deducting from it.
Can a deduction take my pay below the National Minimum Wage?
Not normally. GOV.UK says a deduction "cannot normally reduce your pay below the National Minimum Wage even if you agree to it", then lists exceptions including tax and National Insurance, repayment of a loan or wage advance, an accidental overpayment, employer accommodation, and deductions for your own use such as union subscriptions.
What should I do if my payslip is wrong?
Check the gross pay figure and the codes, then raise it with your manager, payroll team or employer as soon as possible, in writing, with the payslip attached. Acas advises exactly that first step, and says an employee can raise a grievance, and ultimately make a tribunal claim, if the informal route does not resolve it.
Your next step: read one payslip properly
- Find your gross pay and check it against the hours, rate or salary you expected.
- Mark each deduction as taken before tax or after tax, and name the authority for each one.
- Read your tax code and National Insurance category letter, and query any change you cannot explain.
- Compare the year-to-date totals with the month, because the year is where PAYE settles.
If you set pay rules for other people, write them down in language the people they apply to can follow: read and download our compensation policy guide. The guide is free to read, and the PDF uses our short download form.
Want pay-related steps to have an owner and a date rather than a good intention? Book a New Dynamics demo and bring the process you run today. You can also email contact@new-dynamics.com.
