How to read a pay stub: a UK payslip walkthrough
Every employee and worker in the UK has a legal right to a written pay statement on or before payday, under the Employment Rights Act 1996 [1]. Since 6 April 2019 that right covers all workers, including casual and zero-hours staff, and the document must show hours worked whenever pay varies with time [2].
"Pay stub" is the American name for the document; in the UK it is called a payslip, a wage slip or an itemised pay statement. Whatever the label, the document follows a predictable structure, and reading it line by line takes only a few minutes once each field is understood.
This guide walks through a UK payslip from top to bottom: the identity fields, the tax code, the National Insurance letter, the earnings block, each deduction, the net pay figure and the year-to-date totals. It closes with the checks that catch the most common payroll errors and the steps to take when a figure looks wrong.
Key takeaways
- Every employee and worker must receive a payslip on or before payday, including casual and zero-hours staff.
- The tax code, not the salary, determines how much income tax is deducted; the standard code for the 2026-27 tax year is 1257L.
- A payslip must itemise every variable deduction separately, and show hours worked where pay varies by time.
- Year-to-date figures track cumulative pay and tax since 6 April and should match the P60 at year end.
- Errors are best raised with the employer first; unresolved underpayment claims must reach an employment tribunal within three months less one day.
Pay stub, payslip, pay statement: one document, many names
The legal term in Great Britain is "itemised pay statement", defined in section 8 of the Employment Rights Act 1996 [1]. Employers and employees usually say payslip. The American "pay stub" and "paycheck stub" describe the same thing and are common search terms among workers new to the UK system.
The format is flexible. A payslip can be printed, emailed or published on a secure portal, as long as it arrives at or before the moment of payment [2]. What is not flexible is the content: gross pay, net pay, every variable deduction with its purpose, and hours where pay depends on time worked must all appear [3].
The identity fields at the top
Name, payroll number and National Insurance number
The top block identifies the employee and the period. Alongside the name, many employers print a payroll number used by their payroll software to identify the individual [4]. The National Insurance number, in the format of two letters, six digits and a final letter, links the record to the employee's contribution history [5]. The pay period and the payment date complete the block; the pay period matters because PAYE and minimum wage compliance are both tested per period, not per year.
The tax code
The tax code tells the employer how much tax-free pay to allow before deducting income tax. The standard code for the 2026-27 tax year is 1257L, representing the £12,570 Personal Allowance [6]. The table below decodes the most common formats.
| Code | Meaning |
|---|---|
| 1257L | Full Personal Allowance of £12,570 [[6]](https://www.gov.uk/employee-tax-codes) |
| BR | All earnings taxed at the basic rate, common for second jobs |
| D0 / D1 | All earnings taxed at higher or additional rate |
| K prefix | Deductions exceed the allowance, so untaxed income is added back |
| S or C prefix | Scottish or Welsh rates apply |
| W1 / M1 / X suffix | Emergency code, tax calculated on this period only [[7]](https://www.gov.uk/tax-codes/emergency-tax-codes) |
An emergency suffix usually appears after a job change when HMRC lacks full income details. It is temporary and normally resolves within weeks once Real Time Information catches up [7]. How the code interacts with the wider system is covered in Moonworkers' guide to how PAYE works.
The National Insurance category letter
Separate from the NI number, a single category letter tells the payroll which contribution rates apply. Most employees are category A [5]. Letters M (under 21), H (apprentice under 25) and V (veteran) remove employer contributions up to £50,270 a year, while letter C applies to employees over State Pension age, who pay no employee NI at all [8].
The earnings block
Gross pay and pay rate
The earnings section lists everything earned in the period: basic pay, overtime, bonuses, commission, holiday pay and any statutory payments such as sick pay [9]. The total is the gross pay, the figure all deductions are calculated from. Salaried employees should see one-twelfth of their annual salary each month; hourly workers should see the rate multiplied by the hours.
Hours worked
Where pay varies by time, the payslip must state the total hours that generated it, either as one combined figure or split by rate [1]. This requirement, in force since 6 April 2019, exists so that workers on variable hours can check their pay against the National Minimum Wage [2]. A missing hours figure on a variable-pay payslip is itself a compliance failure.
The deductions block
Deductions transform gross pay into net pay, and the law requires each variable deduction to be itemised with its amount and purpose [3]. The table below shows what a typical employee sees in the 2026-27 tax year.
| Deduction | How it is calculated |
|---|---|
| Income tax (PAYE) | 20% above the £12,570 allowance, 40% above £50,270, 45% above £125,140 [[10]](https://www.gov.uk/income-tax-rates) |
| National Insurance | 8% on earnings between £12,570 and £50,270 a year, 2% above [[8]](https://www.gov.uk/national-insurance-rates-letters) |
| Workplace pension | Usually 5% of qualifying earnings from the employee under auto-enrolment [[11]](https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay) |
| Student loan | 9% of earnings above the plan threshold, for example £29,385 on Plan 2 [[12]](https://www.gov.uk/repaying-your-student-loan/what-you-pay) |
Income tax and National Insurance
Income tax follows the tax code cumulatively: each payday the software works out tax due on pay so far this year and deducts the difference [13]. National Insurance, by contrast, is calculated per period without reference to earlier paydays, which is why a one-off bonus can produce a disproportionate NI deduction. Scottish taxpayers see different bands, with rates from 19% to 48% [10].
Pension, student loan and other lines
Auto-enrolment pension contributions appear once the worker is enrolled, with a minimum total of 8% of qualifying earnings of which the employer pays at least 3% [11]. Student loan deductions start only after HMRC instructs the employer, at 9% above the relevant threshold [12]; the mechanics are unpacked in Moonworkers' article on student loan deductions. Other lines can include union fees, season-ticket loans, attachment of earnings orders and salary sacrifice adjustments, each of which must be identifiable [3].
Net pay and the year-to-date figures
Net pay, sometimes labelled "take-home pay", is what actually reaches the bank account. If wages are split between methods, for example part cash and part transfer, the payslip must show the amount paid by each method [1].
Most payslips also carry year-to-date (YTD) totals: cumulative gross pay, tax, National Insurance and pension contributions since the tax year began on 6 April [4]. These running totals are worth checking because they feed the P60 issued after 5 April; the final payslip of the year and the P60 should agree, as explained in Moonworkers' guide to the P60 end-of-year certificate. When an employee leaves, the same cumulative figures populate the P45 handed to the next employer.
Checking a payslip in five steps
A systematic read catches most errors. The sequence below takes a few minutes per payday.
- Confirm the tax code.** A wrong or emergency code is the most common cause of overpaid tax [7].
- Check gross pay against the contract.** Rate multiplied by hours, plus any overtime and bonus due.
- Scan each deduction.** Every variable deduction must carry a purpose; grouped, unexplained deductions are a warning sign flagged in HMRC's umbrella-company guidance [14].
- Compare NI against the category letter.** An employee over State Pension age paying employee NI, for instance, points to a stale category [5].
- Reconcile the year-to-date totals.** Last period's YTD plus this period's figures should equal this period's YTD.
When something looks wrong, the first step is to raise it with the manager or payroll team informally; if that fails, a written grievance follows, and an employment tribunal claim for unlawful deductions must be lodged within three months less one day of the underpayment [15]. For employers, prevention is cheaper than dispute: HMRC-recognised payroll for SMEs produces itemised, compliant payslips automatically on every payrun, and an online payslip generator covers one-off cases such as a single domestic employee.
Conclusion
A payslip rewards a careful reader. The document compresses the whole PAYE system into one page: the tax code carries HMRC's view of the employee's circumstances, the category letter encodes the National Insurance treatment, the deductions block shows every pound diverted before payment, and the year-to-date totals anchor the record that becomes the P60. Reading it field by field turns an opaque document into a monthly audit of the employer's payroll accuracy.
The direction of travel is towards more transparency, not less. The itemised-hours rule extended payslip rights to millions of variable-hours workers, and HMRC's guidance on umbrella arrangements pushes for clearer gross-to-net reporting across the labour supply chain. Employees who know how to read the document, and employers whose software produces it correctly, are both ahead of that curve.
Frequently asked questions
What is the difference between a pay stub and a payslip?
Nothing except geography. "Pay stub" is the US term for the document UK law calls an itemised pay statement and most people call a payslip. In the UK the content is regulated by the Employment Rights Act 1996, which requires gross pay, net pay, itemised variable deductions and, where pay varies by time, hours worked.
Why does a payslip show an emergency tax code like 1257L W1?
A W1, M1 or X suffix means tax is being calculated on that period alone rather than cumulatively, usually because HMRC does not yet have complete income details after a job change. The code normally corrects automatically once HMRC processes the new employment data, and any overpaid tax is refunded through a later payslip.
What does YTD mean on a payslip?
YTD stands for year to date. It is the running total of pay, tax, National Insurance and other deductions accumulated since the tax year started on 6 April. The YTD figures on the final payslip of the tax year should match the P60, which makes them the quickest way to verify the annual record.
Are digital payslips legal in the UK?
Yes. A payslip can be provided on paper, by email or through an online portal, provided the worker receives it at or before payday and can access it readily. The legal requirements concern timing and content, not the medium.
