Key facts
- Gross pay is before deductions; net pay is what lands in your bank after tax, NI, pension and student loan
- On £35,000 with tax code 1257L, monthly gross is £2,916.67 and net pay is £2,393.30
- Income tax is £373.83 a month and employee National Insurance £149.53 at that salary
- Emergency codes ending W1, M1 or X tax each pay period separately and can overcharge until corrected
The two biggest deductions are explained in income tax bands guide and National Insurance rates guide, and your pension line in pension auto enrolment guide or, if before tax, salary sacrifice guide.
| Payslip line | Amount |
|---|---|
| Gross pay | £2,916.67 |
| Income Tax (PAYE) | £373.83 |
| Employee National Insurance | £149.53 |
| Net pay (take-home) | £2,393.30 |
No pension or student loan in this example. Source: WhatsUK calculation, 2026/27 rates, 16 June 2026.
Watch how your pension is labelled, because it changes the tax. A line marked Pension (Salary Sacrifice) is taken before tax and National Insurance, so your gross pay is already reduced and you save both. A line marked Pension (Employee) or relief at source is taken after tax, and the provider claims 20% back into your pot. A line marked Employer Pension is your employer's contribution, shown for information only and not deducted from your pay.
If a student loan appears, see student loan repayment guide, and check your own numbers with the contractor take home calculator.
Your payslip contains six key figures that tell you exactly how your gross salary became your take-home pay. If the numbers do not match what a salary calculator shows, one of these six sections is different from its default: your tax code, your National Insurance category, your pension type, your student loan plan, a benefit-in-kind, or a one-off deduction.
What Your Employer Must Legally Show You
Under the Employment Rights Act 1996, updated in 2019, all workers (not just employees) are entitled to an itemised payslip. Your payslip must display:
- Gross earnings (before deductions)
- Each deduction with its purpose (income tax, National Insurance, pension)
- Net pay (after all deductions)
- For workers paid by hours, the number of hours worked if this affects pay
Your employer's PAYE reference number, your NI number, your employee number, and your tax code should also appear, though the precise layout varies by payroll software.
A Real Payslip Example: £32,000 Salary, 2026/27
The following shows a typical monthly payslip for a UK employee on £32,000 per year with tax code 1257L, NI category A, 5% pension (relief at source), and no student loan.
| Line | Description | Monthly Amount |
|---|---|---|
| Basic salary | Gross monthly pay | £2,666.67 |
| Gross pay | £2,666.67 | |
| Income tax (PAYE) | At 20% basic rate | £323.40 |
| National Insurance | Employee Class 1 (8%) | £129.53 |
| Pension (5% employee) | Relief at source deduction | £108.19 |
| Total deductions | £561.12 | |
| Net pay | Take-home | £2,105.55 |
Cross-check your own figures using the UK Salary Calculator. Enter your gross salary, tax code, pension percentage, and NI category to see whether your payslip deductions match what HMRC expects.
Line by Line: What Each Section Means
1. Gross Pay
This is your salary before any deductions. If you work standard hours, this is your annual salary divided by 12. Overtime, bonuses, commission, and any taxable benefits are added to gross pay before deductions are calculated. Check the Bonus Tax Calculator if a bonus appears on your payslip and you want to verify the tax calculation.
2. Your Tax Code
The tax code, usually shown as a number followed by a letter, tells your employer how much of your pay is tax-free. The most common code for 2026/27 is 1257L.
| Code Element | Meaning |
|---|---|
| 1257 | You can earn £12,570 before tax applies (1257 x 10) |
| L | Standard personal allowance, no adjustments |
| S | You live in Scotland (Scottish rates apply) |
| C | You live in Wales |
| BR | All income taxed at basic rate (often second job) |
| K | Deductions exceed allowances, extra tax applies |
| W1 / M1 | Emergency tax: non-cumulative calculation |
If your code is 1257L W1 or 1257L M1, you are on emergency tax. This means your employer is calculating tax only on this month's pay without considering what you earned earlier in the tax year. You are likely overpaying tax. Contact HMRC at 0300 200 3300 or log into your Personal Tax Account at gov.uk to get your code corrected.
Expert Tip
Check your tax code at the start of every tax year. HMRC automatically issues a PAYE Coding Notice (form P2) between January and March. If yours looks wrong, do not wait for the end of the year to resolve it. Each month on the wrong code means either building up a tax debt (if you are underpaying) or lending HMRC money interest-free (if you are overpaying).3. Income Tax (PAYE)
Income tax is deducted through PAYE (Pay As You Earn) and is calculated on a cumulative basis under a standard tax code. This means your employer considers all the pay you have received from 6 April to the current date and adjusts the monthly deduction accordingly.
For someone on £32,000 with code 1257L:
- Annual taxable income: £32,000 minus £12,570 = £19,430
- Annual income tax at 20%: £3,886
- Monthly income tax: £3,886 divided by 12 = £323.83
Minor rounding differences between this figure and your payslip are normal and correct.
4. National Insurance
Employee National Insurance (Class 1) is calculated separately from income tax and does not use your tax code. For 2026/27, employees pay:
- 8% on earnings between £12,570 and £50,270 per year (£1,047.50 to £4,189.17 per month)
- 2% on earnings above £50,270 per year
For the £32,000 example: Monthly NI = (£2,666.67 minus £1,047.50) x 8% = £129.50
Note that NI is non-cumulative. Each pay period stands alone, regardless of what you earned earlier in the year. If you received a large bonus last month that pushed your earnings above the upper limit, your NI this month is calculated only on this month's pay.
5. Pension Deduction
If you are auto-enrolled in a workplace pension, the deduction appears either as a percentage of qualifying earnings or as a fixed amount. In 2026/27:
- Minimum employee contribution: 5% of qualifying earnings (£6,240 to £50,270)
- Minimum employer contribution: 3% of qualifying earnings
The deduction method affects how it shows on your payslip. Under salary sacrifice, the gross pay line is reduced before tax is calculated, so you save income tax and NI on the contribution. Under relief at source, the full gross pay is shown and the pension deduction comes out of net pay, with HMRC adding basic rate relief directly to your pension pot. NHS employees on the NHS pension scheme use the net pay arrangement, see our NHS pay calculator for tier-based pension deductions on AfC salaries.
| Pension Method | Tax Saving | NI Saving | Shown on Payslip |
|---|---|---|---|
| Salary sacrifice | Yes, at marginal rate | Yes (8% or 2%) | Reduced gross pay |
| Relief at source | Basic rate added by HMRC | No NI saving | Deduction from net |
| Net pay arrangement | Via reduced taxable pay | No NI saving | Deduction before tax |
For a detailed comparison of how much salary sacrifice saves you, use the Salary Sacrifice Calculator.
6. Student Loan
If you have an outstanding student loan, repayments appear as a separate payslip line. The repayment threshold and rate depend on your plan:
| Plan | 2026/27 Threshold | Rate |
|---|---|---|
| Plan 1 (pre-2012 England/Wales or any NI) | £26,900/year | 9% |
| Plan 2 (post-2012 England/Wales) | £29,385/year | 9% |
| Plan 4 (Scotland) | £33,795/year | 9% |
| Plan 5 (2023 onwards, England) | £25,000/year | 9% |
| Postgraduate Loan | £21,000/year | 6% |
If you are on Plan 2 and earn £35,000, your annual repayment is: (£35,000 minus £29,385) x 9% = £505.35, or about £42 per month.
Why Your Payslip Might Not Match the Calculator
The most common reasons a payslip deduction differs from an online calculator result:
- You are on an emergency tax code (W1/M1) rather than a cumulative one
- Your pension uses salary sacrifice rather than relief at source
- You have a company benefit (car, health insurance) included in your tax code
- You have a student loan repayment that was not included in the calculation
- Your NI letter is not category A (there are different NI categories for specific situations)
- You changed jobs mid-year and your YTD cumulative figures differ from what a fresh-start calculation assumes
The Year to Date (YTD) columns on your payslip are your best tool for checking the running total. At tax year end, these figures should match your P60. If they do not, contact HMRC.
UK Salary Calculator
Enter your gross salary, tax code, pension percentage, and NI category to verify your payslip deductions match what HMRC expects.
Your Employer's NI: Important but Not Your Deduction
Many payslips show the employer's National Insurance contribution as a separate informational line. For 2026/27, employers pay 15% on employee earnings above £5,000 per year (the secondary threshold). This is not deducted from your pay. It is an additional cost to your employer. For a £32,000 salary, the employer pays approximately £3,600 per year in NI contributions on top of your gross pay.
Related Calculators
Frequently Asked Questions
Gross pay is your total earnings before anything is taken off. Net pay, the figure that lands in your bank, is what remains after income tax, National Insurance, pension and any student loan or other deductions. On a £35,000 salary, monthly gross is £2,916.67 but net pay is £2,393.30.
Your salary is a gross figure, but you only receive it after deductions. On £35,000, income tax takes £373.83 a month and National Insurance £149.53, before any pension or student loan. A workplace pension reduces take-home further, though that money is yours. A wrong tax code can also cut take-home until it is corrected.
Emergency codes end in W1, M1 or X, such as 1257L W1. They tax each pay period on its own rather than across the year, so you can overpay if your earnings vary. They are common when starting a new job before HMRC has your full details. Once your correct code is applied, any overpaid tax is refunded.
Confirm your tax code matches your circumstances, that gross pay equals your contractual rate for the period, and that the year-to-date totals roughly equal the sum of your payslips since 6 April. Cross-check your net pay against a take-home calculator. Raise any difference of more than a few pence with payroll quickly.
PAYE stands for Pay As You Earn. It is the HMRC system that requires employers to calculate and deduct income tax and National Insurance from employee wages before paying them. The deductions are paid directly to HMRC each month.
Tax code 1257L means your employer is applying a personal allowance of £12,570 to your earnings. The first £12,570 you earn in the tax year is tax-free. The "L" indicates a standard allowance with no special adjustments.
YTD stands for Year To Date. It shows your cumulative gross pay, income tax, and National Insurance contributions from 6 April to the date of your current payslip. Your YTD figures at 5 April should match your P60.
No. Employer NI is an additional cost to your employer, not a deduction from your salary. It does not appear in your "Total Deductions" line.
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James Hartley is a Chartered Management Accountant (CIMA) with more than eight years of experience in UK tax, payroll and compliance. He holds a BSc in Finance and Economics from the University of Manchester and spent his early career at a Big 4 accounting firm. He founded WhatsUK to build free UK financial calculators and guides verified against official HMRC sources. He authors every calculator and article on WhatsUK.
Sources & Official References
- GOV.UK: Payslips- Employer obligations for itemised payslips
- GOV.UK: PAYE- HMRC PAYE system guidance
- GOV.UK: Tax codes- How tax codes work
- Employment Rights Act 1996 (as amended 2019)- Legal right to itemised payslips
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Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.