Most payslips pack a lot of information into a small grid, and it's easy to glance at the final “net pay” figure and ignore the rest. Understanding each line makes it much easier to spot a mistake, and to understand exactly why your take-home pay is what it is.
Gross pay vs. net pay
Gross pay is your salary before anything is taken off. Net pay, also called take-home pay, is what actually lands in your bank account once Income Tax, National Insurance, and any other deductions (a student loan repayment, a pension contribution, a salary sacrifice arrangement) have been subtracted. Everything else on a payslip exists to explain the gap between those two numbers.
What is a tax code, and what does mine mean?
The most common tax code for the 2026/27 tax year is 1257L. The number is your tax-free Personal Allowance divided by 10, so 1257 represents £12,570, and the letter describes how that allowance applies to you. “L” means you get the standard Personal Allowance with no adjustments, which covers most employees with a single job and no unusual benefits or underpayments.
A few other letters show up regularly. “BR” means all of this income is taxed at the basic rate with no Personal Allowance applied, common on a second job. “0T” means no Personal Allowance at all, sometimes used temporarily when HMRC doesn't have enough information about you yet. A “K” code (for example K475) means your allowances are outweighed by deductions, such as company benefits, and effectively adds to your taxable income rather than reducing it. Tax codes can be adjusted for many other reasons too, so if yours looks unusual, it's worth checking the notice HMRC sent explaining it, or asking your payroll team.
Income Tax vs. National Insurance: why are they two separate lines?
They're calculated differently and fund different things. Income Tax pays for general public spending and is charged on income above your Personal Allowance, currently 20% up to £50,270 and 40% above that in England, Wales and Northern Ireland (Scotland uses its own six bands, from 19% to 48%). National Insurance is calculated on a different threshold, currently 8% on earnings between £12,570 and £50,270, and it specifically builds your entitlement to the State Pension and certain other state benefits, which is why it's tracked separately even though both come out of the same payslip.
Common payslip deductions explained
- Income Tax (PAYE) — collected automatically by your employer and sent to HMRC on your behalf, based on your tax code.
- Employee National Insurance — your contribution towards the State Pension and other state benefits.
- Student loan repayment — only appears if you have an outstanding student loan and earn above your plan's threshold; shown as a set percentage of income above that threshold.
- Workplace pension contribution — your own contribution if you're in a standard (non-sacrifice) pension scheme, shown as a deduction from gross pay.
- Salary sacrifice — if you've agreed to a sacrifice arrangement, this reduces your gross salary line itself rather than appearing as a separate deduction, since your contractual pay is genuinely lower.
What your employer pays that you don't see
Two costs sit entirely on your employer's side and never touch your take-home pay directly, though they're worth knowing about. Employer National Insurance is currently charged at 15% on your earnings above £5,000, on top of your salary. And if your employer contributes to your pension, whether through standard auto-enrolment or a salary sacrifice arrangement, that contribution is separate from anything shown as a deduction from your pay. Some payslips list these for information, others don't show them at all.
If your own payslip doesn't match what you expect once you know what each line means, the take-home pay calculator lets you check your salary against this year's actual Income Tax, National Insurance and student loan rules, so you can see where any difference is coming from.