All information correct from February 2023.
Woohoo! It’s payday, and you have finally gotten your well-deserved payslip. You have worked long and hard for this moment, but what do all of these numbers mean!? Payslips are super confusing! Unfortunately, we can’t simply screenshot a standard payslip and show you, because each company has their payslip design and layout. But we at StudentJob, will try our best to describe one for you - do you have a good imagination?
It is your employee's right to receive a payslip on the day of or before payday. Your payslip can be electronic (digitally received by email or a computer system) or a paper one. Everyone with an employment contract must receive a payslip - accept for people who are self-employed or are freelancers.
It is super important to keep a record of your payslips because they contain sensitive information, and payslips can be for evidence for financial products, such as loans. It is also a good idea to keep your payslips safe, in case of a problem in the future and you need to have a record of your paychecks.
Your payslip contains super essential information, so it's a good idea to study your payslip carefully and to learn what it all means. Your payslip must include the following;
Gross Pay. This is what you have earned in the month before any deductions.
Net Pay. This number is what will be put inside your bank account.
Variable Deducations. These are deductions from your gross pay, like national insurance and tax.
Fixed Deducations Deductions such as a trade union fee, if you’re a member.
Part Payments. Separate figures for a cash payment.
Your Worked Hours. Important if your working hours vary week by week.
Your employer may include these as well, although they are not legally obliged to do so.
Tax Code. Your code for taxes, see our tax code guide to find out about your tax code and what it means.
National Insurance Number. Everyone over the age of 16 has a national insurance number.
Pay Rate. How much you earn annually or hourly.
Additional Payments. Such as overtime, tips or bonuses.
Each payslip varies from company to company, so we will try our best to break down what everything is and what it all means, below.
What Does My Payslip Mean?
When you receive your payslip, it may be a little bit confusing. But, we will go through it together and decipher it. Please keep in mind, everyone's payslip may be different. People have different variables on their payslips, such as pensions and maternity leave rates. However, your payslip should include most of the following;
Your personal information. Your name and in some cases your address will be shown.
Your Payroll number. Your company will use payroll numbers to identify you for their record keeping.
Tax period. The number here shows the period for your payslip, a tax year is April to April, so if the number is 01, that means April. 12 means March.
Your Tax Code. Your code is unique to you and is provided by HMRC. Your code tells your employer what tax needs to be deducted from your wage.
Your National Insurance Number. Also known as NI, is another unique number assigned to you. Your NI is for payments towards social security and state welfare.
Payments/Commissions - your gross pay. How much you have earned is here before any deductions are made. You will also see your hourly rates.
Expenses. Any reimbursements of travel or business will be seen.
Deducations. Here you will pay your taxes and national insurance rates.
Pensions. If you're paying a workplace pension, you will see your rate.
Student Loans. Any repayments for student loans will be seen.
Court Orders. If you have unpaid fines, issued by a court order, this will be deducted.
Child Maintenance. Also known as CMS or DEOs, you will see your rate. Some companies charge an admission fee for this too.
Sick Pay. You may receive sick pay, also known as SSP if you're off work for some time.
Maternity/Paternity Pay. Another list of acronyms, SMP, ShPL, ShPP and SAP, are all for maternity, paternity, shared paternity and adoption pay. Here is your payment if you are entitled to it.
Workplace Benefits. Here you may see your health insurance if applicable to your workplace.
Other Deducations. Things like, trade unions membership fees will be seen here.
Summary. Your payslip might show an overview of all of your earnings for the financial year.
Net Pay. The most crucial bit, net pay is what will be inside your bank account after taxes and any deductions.
If you’re unsure or don’t understand your payslip, you should talk to the person in charge of payroll at your company.
What Is National Insurance?
National Insurance, also known as NI, is a tax system paid by workers and employers for funding state benefits. National Insurance contributions pay for the NHS, state pension, welfare and disability allowance. Anyone above the age of 16 is mandated to pay National Insurance as long as you earn more than ￡183 a week. If you’re self-employed, you need to pay National Insurance if you make more than ￡9,516 a year. You will receive a National Insurance Number in the post when you become 16 years old. The National Insurance is deducted from your payslip in the form of tax.
There are different National Insurance Classes. The type you pay depends on your employment status and how much you earn, and whether you have gaps in your National Insurance record. If you’re employed, you stop paying National Insurance once you reach state pension age.
What Are The National Insurance Rates?
Depending on what class your National Insurance falls under, you will be paying different National Insurance rates. These vary from person to person, depending on your employment status and how much you earn. The National Insurance rates are represented as letters, and the National Insurance classes are represented as numbers. This can be a little confusing, so we shall break it down for you. First, we will talk about National Insurance rates.
National Insurance Rates
| Letter | ￡120 -￡183 a week | ￡183.01 - ￡962 a week | Over ￡962 a week |
|---|---|---|---|
| A | 0% | 12% | 2% |
| B | 0% | 5.85% | 2% |
| C | 0% | 0% | 0% |
| H | 0% | 12% | 2% |
| J | 0% | 2% | 2% |
| M | 0% | 12% | 2% |
| Z | 0% | 2% | 2% |
If you’re in category A, and you earn ￡1000 a week, you’ll pay nothing on the first ￡183. But you will pay, 12% on your earnings between ￡183.01 and ￡962, and 2% on your earnings over ￡962. This means your National Insurance payment is ￡94.24 a week.
National Insurance Classes
The National Insurance class, also known as NICs, you pay depends on your employment status and how much you earn. If there are any gaps in your National Insurance record, you can make voluntary repayments to fill those gaps.
| National Insurance Class | Who Pays |
|---|---|
| Class 1 | Employees earning more than ￡183 a week |
| Class 1A or 1B | Employers pay these directly on their workers' benefits |
| Class 2 | Voluntary payment for self-employed people who earn less than ￡6,475 a year |
| Class 3 | Voluntary payments to fill in gaps on your record |
| Class 4 | Self-employed people who earn more than ￡9,501 a year |
The more you pay into your National Insurance, the more money you’re entitled to in a state pension when you retire. So it is a good idea to give voluntary repayments to your National Insurance if there are gaps or less than 35 years worth of contributions on your record.
Whew! If you want to learn more about the ins and outs of the UK tax system and minimum wage, keep browsing the StudentJob Career Advice Career Advice. Perhaps you’re looking for a part-time job?. Why not register and upload your CV for free and browse our available jobs.
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