A pay stub (payslip in the UK) shows the breakdown of your earnings and deductions for a pay period. Being able to read yours accurately helps you spot errors, understand your take-home pay, and verify deductions.
Key Sections of a Payslip
1. Personal and Pay Period Information
- Employee name and payroll number
- Pay period (e.g. "April 2025" or "Week 14")
- Payment date
2. Gross Pay
Your total earnings before any deductions:
| Component | Description |
|---|---|
| Basic salary | Agreed base pay |
| Overtime | Hours beyond standard |
| Commission/bonus | Performance pay |
| Statutory pay | SSP, SMP, SPP |
| Benefits in kind | Company car, private health (taxable) |
3. Deductions
Statutory (compulsory) deductions:
| Deduction | UK | US |
|---|---|---|
| Income tax | PAYE | Federal/State income tax |
| Social insurance | National Insurance | FICA (Social Security + Medicare) |
Employee pension contribution (auto-enrolled minimum: 5% gross, of which 1% is tax relief)
Voluntary deductions:
- Student loan repayment
- Childcare vouchers
- Cycle-to-work scheme
- Additional pension contributions
- Health insurance premiums
4. Net Pay
Net pay = Gross pay − Total deductions
This is what lands in your bank account.
UK PAYE Payslip: Worked Example
| Item | Amount |
|---|---|
| Basic salary | £3,000.00 |
| Bonus | £500.00 |
| Gross pay | £3,500.00 |
| Income tax (PAYE) | −£502.60 |
| National Insurance (12%) | −£357.60 |
| Pension (5%) | −£175.00 |
| Net pay | £2,464.80 |
Understanding Your Tax Code (UK)
Your tax code (e.g. 1257L) determines your tax-free personal allowance:
- The number × 10 = annual personal allowance
- 1257L = £12,570 tax-free per year
- BR = Basic rate on all earnings (no allowance — check this is correct)
- W1/M1 = Emergency code — contact HMRC
Common Payslip Mistakes to Check
- Wrong tax code (most common error)
- Student loan deductions after loan is paid off
- Wrong NI category (category A is most common for employees)
- Missing pension contribution matching
- Incorrect overtime or bonus calculation
Year-to-Date (YTD) Figures
Most payslips show cumulative year-to-date totals. At year end, verify these match your P60 (UK) or W-2 (US) — used to complete your tax return.