Let’s break it down…
What Is A Payslip?
Your payslip is what your employer provides you on the day (or before the day) you get paid. Your payslip should include how much you’re getting paid and any deductions that may be taken, such as your pension, National Insurance etc. Let’s look at the elements that make up a payslip…
First of all, you should see your name and your address. A payslip can be used as proof of address should you need it – for example, if you need to provide proof of address to an employer, bank or landlord. That’s why it’s important to make sure your correct name and address is kept up to date with your current employer.
You’ll see your payroll number. This is what employees use to identify their staff to make sure the right person is getting paid the correct amount. You’ll also see a date on your payslip which indicates when you will be paid.
Your payslip will include a tax period showing the current tax year. Your tax code will also be shown on the payslip – this is a code given to you by HMRC to ensure you are paying the right amount of income tax for the financial year. Always make sure to double-check your tax code – you may be paying too much or not enough tax if this code is not correct. Visit HMRC to see if you are paying the right amount of tax: https://www.gov.uk/income-tax/check-youre-paying-the-right-amount
Now on to your National Insurance number! Everyone who has the right to work in the UK has a unique NI number and you should never, ever share this with anyone other than:
- HM Revenue and Customs (HMRC)
- Your employer
- The Department for Work and Pensions (which includes Jobcentre Plus and the Pension, Disability and Carers Service), if you claim state benefits, or in Northern Ireland the Department for Social Development
- Your local council, if you claim Housing Benefit, or the Northern Ireland Housing Executive
- Electoral Registration Officers (to check your identity when you register to vote)
- The Student Loan Company, if you apply for a student loan
- Your pension provider if you have a personal or stakeholder pension
- Your Individual Savings Account (ISA) provider, if you open an ISA
- Authorised financial service providers who help you buy and sell investments like shares, bonds and derivatives – you can check if your provider is authorised here.
Your NI number is used to identify you as an individual throughout your life – even if you change your name, your NI number will remain the same. You pay mandatory National Insurance if you’re 16 or over and are either:
- An employee earning above £242 a week or
- Self-employed and making a profit of £6,725 or more a year
You may also see adjustments or deductions such as sick pay, maternity, court orders, child maintenance payments, paternity or student loan payments, depending on your situation.
PAY DAY – YAY!
Lastly, of course, you’ll see the amount of money you are to be paid. Your ‘net pay’ is basically what is left after deductions/adjustments – i.e., this is the number you will actually be paid. This may include overtime and any commission you are owed. Your payslip may also show your hourly rate or any bonuses owed. Some payslips may also contain expenses you are being reimbursed – these can be taxable or non-taxable.
For more advice about tax and National Insurance contributions, visit HMRC: https://www.gov.uk/browse/tax