UK Payslip Explained 2026/27
A complete, visual guide to every line on your UK payslip. Understand your tax code, PAYE, National Insurance, pension deductions, YTD figures, and what your employer actually pays.
Your payslip is one of the most important financial documents you receive regularly, yet for many people it looks like a wall of numbers and acronyms. Millions of pounds in tax are overpaid every year simply because people do not know how to check them. This guide walks through a real payslip from top to bottom.
NI: AB 12 34 56 C · Payroll: 00841
YTD Tax: £1,059.20
YTD NI: £362.32
1. Personal information & identifiers
The top section contains vital details that link your pay to your HMRC record:
- National Insurance number: Your unique 9-character identifier (AB123456C). Every NI contribution made builds your State Pension entitlement — check it matches your NI card.
- Payroll number: Your employer's internal reference. Useful when contacting HR or payroll.
- Tax period: Month 1 = April, Month 12 = March. If you see "W" it is a weekly pay period.
- PAYE reference: Your employer's unique tax ID (e.g., 123/AB456). You need this when contacting HMRC.
2. Your tax code
The most important number on your payslip. For 2026/27 the standard code is 1257L, meaning you earn £12,570 tax-free before paying Income Tax. The number is your allowance divided by 10; the letter tells your employer how to apply it:
| Code | What it means | Action needed? |
|---|---|---|
| 1257L | Standard — full personal allowance | None, all good |
| 1257L W1/M1 | Emergency — week/month 1 basis | Check with employer or HMRC |
| BR | Basic rate 20% on all pay — no allowance | Contact HMRC immediately |
| 0T | No personal allowance at all | Contact HMRC immediately |
| K code | Allowance is negative (taxable benefits exceed PA) | Review P11D benefits |
| NT | No tax at all | Only valid in specific circumstances |
3. Payments (gross pay)
Everything you earn before deductions:
- Basic Pay: Your standard contracted salary or hourly wage.
- Overtime: Extra hours worked. Overtime is taxed the same as regular pay.
- Bonus/Commission: Bonuses are fully taxable and often push you into a higher band for the month.
- Statutory Pay: SSP (£123.25/wk), SMP/SPP (£194.32/wk) — taxable and shown as payments.
4. Deductions
Income tax based on your tax code. In 2026/27: 0% up to £12,570, 20% on £12,570–£50,270, 40% on £50,270–£125,140, 45% above. If your monthly tax looks wrong, check your tax code first.
Am I overpaying tax?Employee Class 1 NI: 8% on earnings between £1,048/month and £4,189/month, then 2% above. NI does not start until you earn over the Primary Threshold (£1,048/month).
National Insurance explained →Auto-enrolment minimum is 5% employee + 3% employer on qualifying earnings. If via Salary Sacrifice, your gross pay is reduced before tax — saving you NI as well as income tax.
Pension deductions explained →Plan 2: 9% of earnings above £28,470/year. Plan 5: 9% above £25,000. Plan 1 (older): 9% above £24,990. The relevant threshold is applied automatically by your employer.
5. Net pay (take-home)
The bottom line — what lands in your bank account. Gross Pay minus all deductions equals Net Pay. Use our calculator to verify this against what you actually received.
6. Year-to-date (YTD) figures
YTD figures show cumulative totals from 6 April to your current pay date. They appear separately for gross pay, tax, NI, pension, and student loan. The UK tax system is cumulative — each month, your employer recalculates how much tax you should have paid in total to date and adjusts accordingly. This is why a small pay rise in one month can automatically correct underpayment from earlier months.
Does your payslip look right?
Enter your gross salary to see a full breakdown of what your deductions should be — and quickly spot if something is wrong.