How to read a payslip

A payslip is the closest look you get at the machinery between your gross salary and your bank account. It looks like a lot of numbers, but it’s really two columns — this period and year to date — describing the same handful of payments and deductions. This guide walks through every line.

The two columns that matter

The left column is what’s happening this pay period (this month, this week). The right column is year to date — everything since 6 April.

The year-to-date column isn’t just a running total. It’s the number your tax is actually calculated on. PAYE is cumulative: payroll software taxes the whole year to date, subtracts what you’ve already paid, and deducts the rest this period. That’s why an identical salary produces an identical tax bill month after month — and why a change in one period (a bonus, a pay rise, a new tax code) ripples through every payslip after it.

Payments

• Basic pay — your regular salary for the period
• Overtime — extra hours or commission added this period
• Bonus — one-off or periodic payments
• Statutory Sick Pay (SSP) — £123.25 a week (2026/27) paid by your employer when you’re off sick, for up to 28 weeks
• Statutory Maternity Pay (SMP) — 90% of your average weekly earnings for six weeks, then a flat £194.32 a week, for up to 39 weeks

Your gross pay is all of these added together — the figure before anything is taken off.

Deductions

• Income tax — the cumulative amount due on your year-to-date pay, minus what you’ve already paid. Your tax code (like 1257L) sets your tax-free allowance.
• National Insurance — the exception to the cumulative rule. Class 1 NI is charged per pay period, on earnings above £12,570 a year pro-rated to the period, at 8% up to the Upper Earnings Limit and 2% above it.
• Pension (employee) — your contribution, either deducted from taxable pay (salary sacrifice) or taken after tax (relief at source)
• Student loan — 9% of your earnings above the plan threshold in the period (6% for the Postgraduate Loan)

Your net pay is what’s left: gross minus all the deductions. That’s what actually lands in your bank account.

The employer column

A payslip (and the calculator on this site) also shows what the job costs the business:

• Employer National Insurance — 15% of earnings above £5,000 a year (2026/27)
• Employer pension — at least 3% under auto-enrolment
• Statutory payments — SSP is a pure employer cost; SMP can be recovered from HMRC at 92%, or 109% for small employers

These don’t come out of your pay — they’re on top of it. A £40,000 employee typically costs the business around £41,000–£42,000 a year before the Employment Allowance.

Why a bonus month looks so different

Two rules collide in a bonus month, and both work against your expectations:

1. Tax is cumulative. The bonus is taxed on top of your whole year’s income, so the marginal tax rate can be 40% or more — and the full extra tax lands that month.
2. NI is per-period. A bonus can push that month’s pay over the Upper Earnings Limit, so part of the bonus is charged at 2% NI rather than 8% — but all of the month’s earnings up to the limit attract 8%, including the normal pay you’d otherwise have paid less on.

The result: a “big” month nets far less than the average. A £5,000 bonus on a £40,000 salary in month 6 adds roughly £1,000 of tax and £150 of extra NI — the payslip calculator shows the exact figures for any period.

Quick checks each payday

1. Year to date matches your expectations — it’s the number the tax calculation really uses
2. Tax code is right — 1257L is the standard 2026/27 code; anything else usually has a reason
3. NI letter and amount look consistent — category A is standard
4. Pension, student loan and any other deductions appear once each

If the payslip calculator on this site gives you something very different from your actual payslip, the usual causes are a different tax code, a mid-year change, or NI being on a different basis (for example, if you’re a director).