Payslips and their purpose

Over all my years of running payroll, one of the most common questions I hear from employees is: “Why is my pay different from last month?”, and my first response is always the same: “Have you checked your payslips?”

It still surprises me how often employees underestimate the importance of payslips and the valuable information they contain. In reality, your payslip acts like a monthly record, summarising your earnings and, just as importantly, any deductions.

Key information found on a payslip

• Tax Code – This is the code used to calculate your income tax. If your tax code has changed, your take-home pay will be affected. Note: the payslip won’t highlight the change, so it’s worth keeping an eye on it.

• National Insurance Category Letter – For example, if you reach state pension age during the tax year, your category may change to “C,” meaning you no longer pay employee National Insurance contributions. This directly impacts your take-home pay.

• Attachment & Deduction of Earnings Orders – In some cases, employers are instructed to deduct money directly from salaries to cover things like fines or child maintenance. (I’ll be sharing a separate article on this topic, so do keep an eye out for that.)

• Gross Pay – The total amount you’ve earned before any deductions.

• Net Pay – Usually displayed at the bottom right-hand corner of the payslip. This is your take-home salary after all deductions.

• Other Deductions – These typically include tax, National Insurance, and pension contributions (if you’re enrolled in a workplace pension).

Why payslips matter

Payslips aren’t just about understanding your monthly pay – they’re often required for practical purposes too. Whether you’re applying for a mortgage, taking out a loan, or renting a property, you’ll usually be asked to provide recent payslips (often three months’ worth).

For this reason alone, it’s a good habit to check and keep your payslips safe. More importantly, by reviewing them regularly, you’ll gain a clear understanding of exactly how your take-home wage is calculated.

Need any help?

If you ever have questions about the details on your payslip or need assistance interpreting the information, please don’t hesitate to get in touch with our team – we’re here to help.