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What is a Payslip? Definition & requirements in the UK
It’s important to understand your payslip. Aside from showing your workplace salary payments, UK payslips cover a lot of useful information. If you are aware of everything that’s going on on your payslip, you can better plan your personal finances.
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Why is a payslip important?
Payslips are important because they allow you to ensure you are being paid and taxed the right amount. Your payslip keeps you updated on important information such as your National Insurance contributions, pension contributions, and student loan repayments. And, vitally, your payslip tells you how much money you are taking home each month.
Payslip requirements in the UK
You should always check your payslip when you receive it to ensure details are correct. If you come across any issues, make sure to raise them with whoever is responsible for payroll management in your organisation - however, payroll management are unable to help with certain issues such as an incorrect tax code, you would need to contact HMRC in this instance.
According to GOV.UK, your UK payslip must include the following information:
How much money you earned, before and after any deductions or tax
The amount deducted from your earnings, for example National Insurance
How many hours you worked, if this affects how much you are paid
An explanation of any fixed deductions e.g. paying back a season ticket
This guide will run through all the key details that should be on your payslip.
Do employers need to provide a payslip?
By law, all employers must provide employees with a payslip, including if they are zero-hours contract workers or agency workers. Employers can decide whether your payslip will be provided electronically or printed. The payslip must be provided on or before payday and meet the UK requirements some of which are discussed earlier in this article.
The Payment of Wages Act of 1991 grants employees the right to a payslip and outlines what a payslip is and what it needs to include to meet UK requirements.
There are a few cases where employers do not need to provide a payslip, including if you are not technically an employee (for example, a freelancer or contractor), if you are in the police, or if you are employed in certain seafaring professions such as the merchant navy.
What does your payslip mean?
Payslips from different organisations may look different and contain slightly different information.
Please click on the highlighted areas to learn more.
Company Name Ltd
EARNINGS
Basic pay
2,164.25
DEDUCTIONS
NaN
NaN
NaN
NaN
NaN*
*Information provided on this site is for illustrative purposes only. Do not make any financial decisions based on the information above without consulting an accountant/payroll specialist.
Please note that payslips can vary, and may include information on:
Expenses (such as travel or food) paid to the employee
Court orders, child maintenance, sick pay or maternity pay
If you went to university, your student loan payments
Any workplace benefits like a cycle-to-work scheme
Your payslip can be used as proof of your earnings, and may be needed when you’re applying for a mortgage or other financial reasons.
What are payslips used for?
Payslips provide a record of your earnings and tax payments, alongside information about any sick pay or bonuses – basically, they help to prove your income.
They are often used as proof that you are at work and show how much you earn.
You may be asked to show a backlog of payslips for important things in life. For example:
Getting a mortgage or renting a house
Applying to live in another country
Using financial services, such as loans
They can also be used for record keeping, if you need information about your earnings. For example, if you are doing a tax return and need to check your employee income.
How often should I check my payslips?
It is worth having a quick glance at your payslip every payday to check it meets UK requirements, but there are certain times when you should definitely give it a thorough check. You should always check your payslip in April, at the beginning of the tax year, when there can be a change to your tax code. It is your responsibility to ensure your tax code is correct.
In general, you should check your payslip whenever there is any change in your financial circumstances, including pay rises, commission payments, or anything of that nature. If your pay varies each month - for example, because you worked overtime - then you should double-check your pay is accurate.
You should also check your payslip if you are receiving any form of statutory pay, such as Statutory Sick Pay (SSP), Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), Shared Parents Pay (SHPP), Statutory Parental Bereavement Pay (SPBP), or Statutory Adoption Pay (SAP).
Should I keep my payslips?
You may want to keep hold of your payslips in case you encounter any problems or mistakes with your earnings or deduction calculations in the future. Having copies of your payslip can make it easier to identify what went wrong.
Another reason to keep hold of payslips is that banks may ask to see recent payslips before offering you certain services or products.
Payroll providers are obliged to keep copies of your payslips dating back three years - they are also obligated to keep employees P60s for at least 22 months after the end of a tax year, so if you need to get hold of payslips or P60s from this period, you can ask them.
What’s the difference between gross and net pay?
Gross pay is what you are paid before deductions for tax, National Insurance, pensions, and so on. Net pay, sometimes referred to as ‘take-home pay,’ is the amount that is remaining after these deductions.
What is basic pay on a payslip?
Basic pay is another name for gross pay. The basic pay is how much you earn before any extra payments. This could be bonuses, overtime and commission, deductions for tax, National Insurance contributions, and pension or other contributions.
What is a tax code?
Your tax code is a series of numbers and letters that shows how much tax-free pay you are entitled to. The most common tax code is 1257L. This tax code means that you are earning £12,570 before tax, and applies to most people who have one job.
You may have a different tax code for a number of reasons, including if you have more than one job, or if you claim marriage allowance.
In the case of marriage allowance, there will be a M or N suffix. The letter ‘M’ signifies that you have received up to 10% of your partner’s personal allowance. The letter ‘N’ shows that you have transferred up to 10% of your allowance to your partner. Both partners have to be basic tax payers to enable this transfer of personal allowance.
What is an emergency tax code?
An emergency tax code is used by your employer if your correct tax code is not available. This may happen when you start a new job, or if you are formerly self-employed.
An emergency tax code assumes you are entitled to the basic allowance of £12,570, but while using an emergency tax code, you will pay tax on all income above the basic allowance. This is not on a cumulative basis. That means that if you are entitled to any other allowances or relief, you may not receive it until you are given the correct tax code by the tax office.
HM Revenue & Customs should automatically rectify the issue in due course, and automatically update your payments. However, it may mean that your payslip looks a little different for a month or two. If you are on an emergency tax code, your payslip will show:
1257 W1
1257 M1
1257 X
What is a payroll number?
A payroll number is a unique series of numbers and letters that an employer assigns to an employee. The majority of companies use a payroll number, and they’re common to larger companies with a large number of employees – helping to keep track of an employee's data and ensure they’re paid the right wages.
Where can I get a payslip?
Your payslip should be sent to you automatically by your employer via post, email, or employee portal. If you need to get hold of additional copies of your payslip, you should get in touch with whoever manages payroll at your organisation. This will probably be someone in the HR or finance department.
What happens if I don’t receive a payslip?
If you don’t receive a payslip when expected, you may want to raise this with your employer as soon as possible. If you still don’t get one, this could be raised as a grievance or a formal complaint.
What could I do if there’s an issue with my payslip?
If you think there is an issue with the amount that you have been paid, then you may want to go to your line manager or the HR department in the first instance.
If you think there is an issue with any of the statutory parts of your payslip, such as your tax code, National Insurance, or student loan repayments, then you could get in touch with HMRC - an employer cannot contact HMRC on behalf of employees.
If you notice any issues with your payslip, addressing them right away might save you a headache later. It is more complicated to sort issues retrospectively, especially if you enter into a new tax year.
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