Back to basics: UK payslips explained

Ah payslips, that all-important document. However, despite being so important, very few of us even check our payslips in detail. Once we see the notification from our bank that we have been paid, we assume everything is okay.

It’s vital that employers address this trend by educating employees on their payslips, so they are financially empowered and able to effectively raise queries if problems occur.

Not sure where to start? Look no further!

In this blog, we explain everything you need to know about UK payslips. Discover what payslip abbreviations and payslip codes (tax codes) mean, why you are getting pay deducted and how long you should keep your payslips for.

What is a payslip?

Your payslip is a vital document containing important information that help you manage your personal finances. They are usually paid monthly, bi-weekly or weekly, and given out to employees on or before each pay day. UK employers are legally required to produce a payslip for every employee, detailing specific information such as net pay and gross pay.

If you wish to apply for a bank loan, or other type of borrowing, it is compulsory to demonstrate your earnings to support your application. Payslips are the most trusted and easiest way to do this.

Earnings and tax payments

A payslip includes a breakdown of your salary. Just because you earn, say, £30,000 a year, it doesn’t mean to take home £30,000 a year. Your payslip will explain why, which will help you get a realistic picture you your finances.

Sometimes referred to as pay stubs, paychecks or pay advice, payslips outline key information like:

• Tax withholdings (e.g. National Insurance (NI))
• Reimbursements for work-related expenses (e.g., mileage or travel costs)
• Deductions like insurance and pension contributions
• Employer contributions toward insurance or pensions

Payslips may also contain additional details, such as accrued or used leave.

Traditionally, payslips were physical documents attached to checks or enclosed in wage envelopes. However, in today’s digital age, electronic payslips have become the norm.

Note: payslips can serve as proof of earnings, taxes paid and any pension contributions.

Do employers need to provide a payslip?

Yes, in most cases, it’s against the law to not provide staff with their payslips on or before their payday.

However, there are exceptions:

• Contractors/freelancers
• Police service members
• Merchant seamen
• Masters or crew members engaged in share fishing (paid by a share in the profits or gross earnings of a fishing vessel)

Note: businesses can choose to provide payslips in either a digital or print format.

When should an employee receive their payslip?

In the UK, employers are legally required to provide employees with a payslip on or before their payday.

What information must be on a payslip?

An employee’s payslip must include the following details by law:

• Gross Pay: your full pay before any tax or National Insurance has been taken off, including any bonuses and commission.
• Net Pay: the amount you get after all deductions have been taken off.
• Variable Deductions: the deductions that could change each payday, and will show the amount that’s being paid. It includes tax and National Insurance.
• Fixed Deductions: deductions which don’t change from payday to payday. An employer doesn’t have to give details of what these deductions are for, as long as they give a separate statement with these details at least once a year.
• Amount and Method of Part Payment: separate figures for cash payments and the remaining balance credited to a bank account
• Hours Worked: if your pay varies based on hours, include the number of hours worked

What else does my payslip show?

The format of your payslip will vary from company to company, and what’s included will depend on your individual earnings, benefits, and deductions.

• Payroll number
• Tax period
• Your tax code
• National Insurance number
• Statutory pay
• Sick pay
• Maternity/paternity/adoption pay
• Expenses
• Pensions
• Student loan
• Workplace benefits
• Court orders and child maintenance

Guide: Electronic payslips – why you need to ditch the paper

Download here

 Understanding your payslip  

When was the last time you closely examined your payslip? Even if you have recently, did you fully understand all the details?

We’re here to help! Below is an example UK payslip; we’ve numbered and detailed the various elements you’re likely to find.

1) Employee number/Payroll number

Also known as a payroll number, an employee number is assigned to each worker by their employer to identify them during the payroll process.

2) Personal details

Payslips typically include personal details such as names and sometimes even home addresses.

3) Date

The date featured on your payslip generally refers to when the salary will be paid to employees’ bank accounts.

4) National Insurance (NI) number

HMRC provides every employee with a unique National Insurance (NI) number to distinguish workers from each other and help ensure tax and National Insurance contributions are correctly recorded.

5) Gross pay

This shows earnings before any taxes, contributions or other deductions are applied.

6) Tax period

The year is divided into different tax periods, determining the tax and national insurance thresholds applicable.

7) Tax code

The tax code informs employers of an employee’s tax-free income entitlement before taxes are deducted.

8) Deductions

This section shows the deductions from gross pay, including tax and National Insurance + if staff are contributing to a workplace pension, they’ll find the amount they’re adding here.

9) Year-to-date (YTD) earnings

Certain payslips will display earnings and deductions paid for the current financial year.

10) Pay method

The pay method refers to how the employee will be paid; for example, cash or direct debit.

11) Net pay

This shows the amount an employee takes home after all their deductions.

Know your tax code

Your tax code is determined by HMRC. It’s usually made up of a few numbers and a letter to represent the total you can earn before paying any tax. The tax code presented on a UK payslip depends on your personal allowance, any additional allowances or deductions that may apply to you, and your employment circumstances.

For example: Tax code: 1257L = You can earn £12,570 before any tax deductions apply.

The most common tax code for the 2025 to 2026 tax year is 1257L. This applies to the majority of individuals with a single job and no untaxed income, unpaid taxes, or taxable benefits. However, we breakdown the meaning of tax code variations below so you don’t get caught out.

Tax code numbers meaning

The numbers in your tax code indicate the amount of tax-free income you’re entitled to during that tax year.

HMRC works out the number based on your tax-free Personal Allowance and income you have not paid tax on. They also take the value of any company benefits into account.

Tax code letters meaning

The letters in your tax code refer to how your Personal Allowance is influenced by your situation.

• L – You qualify for the standard Personal Allowance.
• M – 10% of your partner’s Personal Allowance has been transferred to you under the Marriage Allowance scheme.
• N – You’ve transferred 10% of your Personal Allowance to your partner as part of the Marriage Allowance.
• T – Your Personal Allowance involves additional calculations for the tax code.
• 0T – Either your Personal Allowance is fully used, or you’ve started a new job and your employer lacks the information needed for your tax code.
• BR – All your income from this job or pension is taxed at the basic rate, often used if you have multiple jobs or pensions.
• D0 – You’re taxed at the higher rate on all income from this job or pension, usually applied when you have more than one income source.
• D1 – All your income from this job or pension is taxed at the additional rate and is typically used for secondary incomes.
• NT – No tax is applied to this income.
• S – Your income or pension is taxed according to Scottish tax rates.
• S0T – Your Scottish Personal Allowance is exhausted, or your employer doesn’t have the necessary details for your tax code.
• SBR – Income from this job or pension is taxed at the Scottish basic rate, commonly used for multiple income sources.
• SD0 – The intermediate rate in Scotland applies to all income from this job or pension, usually if there’s another income.
• SD1 – All income from this job or pension is taxed at the Scottish higher rate, often used with multiple incomes.
• SD2 – The advanced tax rate in Scotland applies to all income from this job or pension, typically for additional income sources.
• SD3 – All your income from this job or pension is taxed at the Scottish top rate, frequently applied when you have more than one job or pension.
• C – Your income or pension is taxed under Welsh tax rates.
• C0T – Your Welsh Personal Allowance is fully utilised, or your employer doesn’t have the required tax code details for you.
• CBR – All your income from this job or pension is taxed at the basic rate in Wales, often for secondary incomes.
• CD0 – Your income from this job or pension is taxed at the higher rate in Wales, which generally applies if you have additional income sources.
• CD1 – All your income from this job or pension is taxed at the additional rate in Wales, usually for multiple incomes.

Pension contributions

Many employers offer pension schemes as part of their

For example: Tax code: 1257L = You can earn £12,570 before any tax deductions apply.

You can also find your tax code on your payslip. It’s usually made up of a few numbers and a letter.

Payslip abbreviations explained

Here’s a breakdown of some other common UK payslips abbreviations and what they mean to employees.

BACS – Bankers Automated Clearing Services

A payment scheme that processes financial transactions

BA/P – Bereavement Allowance/Payment

A weekly allowance given to widowers or surviving civil partners

CHB – Child Benefit

An allowance given to parents with children under 16

ET – Earnings Threshold

The amount you can earn before being required to pay tax

HMRC – Her Majesty’s Revenue and Customs

The government department responsible for tax collection

LEL – Lower Earnings Limit

The amount you can earn before you must pay National Insurance

NIC – National Insurance Contributions

A sum deducted from your salary, in addition to tax

PAYE – Pay As You Earn

A tax deduction taken from HMRC

PILON – Payment in Lieu of Notice

A compensation payment that covers the notice period of an employee who has been terminated/told not to work their notice

PP – Personal Pension

Payments made to a pension provider

SAP – Statutory Adoption Pay

An allowance given to people during the leave they take to adopt a child

SEE – Small Earnings Exception

An exemption given to self-employed people whose profits are less than £5,725 a year

SMP – Statutory Maternity Pay

An allowance given to female employees during the leave they take before and after having a child

SPP – Statutory Paternity Pay

An allowance given to partner employees during the leave they take before and after having a child

SSP – Statutory Sick Pay

Pay given to employees who have been absent from work due to illness.

TY – Tax Year

The year in which tax is calculated

VAT – Value Added Tax

Value based tax added to goods an

Online payslips

According to a survey by the Chartered Institute of Payroll Professionals (CIPP), 83% of respondents reported cost savings with the adoption of online payslips.

An online payslip, or electronic payslip, is essentially a digital version of the traditional paper payslip that an employee receives. Online payslips are available to access securely online from a company intranet or an employee self service facility.

The term ePayslip is also commonly used to refer to an online payslips; however these are slightly different to online payslips. ePayslips are instead emailed directly to an employee.

Once implemented by an organisation, online payslips will typically replace the traditional paper payslip that would have been produced. Current and historical versions of online payslips are usually available to access and if necessary print.

Utilising payroll software to create digital payslips and automate a crucial part of the payroll process is immensely beneficial, saving both time and money.

Should you email your payslips?

Distributing payslips via email was once a popular alternative to traditional paper distribution.

However, the Google Inc. vs. Vidal-Hall court case highlighted the risks associated with this method.

If payslips are intercepted after being emailed to your workforce, employees could have legal grounds to take action against your business, even without a financial loss.

Here are the top four reasons to avoid emailing payslips:

1.     Email security concerns: email is inherently risky, compromising the confidentiality of payslip information.

2.     Discrepancy with financial institutions: financial institutions avoid emailing bank statements, underscoring the questionable security of emailing payslips.

3.     Risk of data protection breaches: emailing sensitive information like payslips can lead to breaches of data protection regulations.

4.     Challenges in tracking emailed payslips: managing and tracking emailed payslips can be difficult, potentially causing significant inefficiencies.

Making payslips simple

Businesses have a few options to make payslip distribution simpler.

With software, such as IRIS My ePay Window, you can toss out the paper hassle and bring your payslips, P60s and other payroll documents into the digital world.

Once the payslips are digitally sent, employees can hop into the portal securely from wherever to check out their payslips, old and new, using a computer or mobile device.

Alternatively, payroll outsourcing providers, such as IRIS Fully Managed Payroll, handle the distribution of digital payslips from start to finish as part of their offering, completely removing the burden.

Guide: A complete guide to payroll outsourcing solutions

Download here