Your payslip - do you know what all the boxes mean and what to look out for? When considering loan applications, we use payslips as proof of income. Here are some general principles to help you understand your payslip.
Did you know:
- Your payslip doesn’t have to be given to you in paper form. It may be emailed to you or downloaded from a website.
- Your payslip can be used as proof of income, proof of pension contributions and proof of tax paid.
- For the above reasons, it’s recommended by the government that you retain copies of your payslips.
Your payslip MUST show:
- Your full pay: how much you’re owed before any payments are taken out. This is your gross pay.
- Your take home pay: how much you get paid after things like pension contributions and student loans have been taken out automatically. This is your net pay.
- Other deductions, such as national insurance or tax: these are variable deductions and can change from payday to payday.
- Any part payments: how much it is and which account it’s credited to.
- Total fixed deductions: such as any trade union subscriptions. Note- an employer doesn’t have to detail what these specific deductions from your wage are for, as long as they give you a yearly statement.
- From 6 April 2019, where an employee is paid on an hourly rate basis, the number of hours worked should also be included on the payslip.
Your employer is not legally required to but may also provide the following on your payslip:
- Your tax code
- National Insurance Number
- Rate of Pay
- Total amount of deductions or pay in the tax year
What is a….
This is just a number assigned to you by your business that helps to identify you within the organisation.
This is a code assigned to you by HM Revenue and Customs and tells your employer how much of your earnings are tax free. It’s your responsibility to check that this tax code is correct. This dictates how much you get taxed, so it's essential you're on the right code. You can find out more here.
…National Insurance Number
In order to work in the UK you must have a National Insurance Number. This number is issued to you at the age of sixteen and doesn’t change throughout your life. You pay national insurance to get certain benefits such as a state pension. Your National Insurance Number is used to record your contributions and build your entitlement to benefits. If you don't pay enough national insurance, you may not get your full allowance to things such as sick pay, jobseekers allowance and state pension. You can check your national insurance record here.
Other things which may be listed on your payslip
Expenses: Any money you’ve paid that your business has agreed to pay back.
Court Orders/Child Maintenance: If you have any unpaid fines or child maintenance payments, a court can order repayments to be taken straight from your pay. You may also have a deduction from earnings order which are taken straight from your pay. Sometimes an employer will take a £1 admin fee. If this happens, it must be shown on your payslip with a description of what it is.
Workplace benefits: For example company car payments, season ticket loans or cycle to work schemes.
Hopefully this helps you to read your payslip so you can understand your income!