Understanding your UK payslip
Payroll errors are common and usually go unnoticed because few people can read their own payslip. These are the lines that matter and the three checks worth doing every April.
Tax code
For most people in 2026/27 this is 1257L, the personal allowance of £12,570 divided by ten. Common variants: BR (all pay taxed at 20%, typical for second jobs), D0/D1 (all at 40%/45%), K codes (negative allowance, often from taxable benefits), and codes ending W1/M1 ("emergency", non-cumulative, often after a job change). A wrong code is a common payroll error; you can check yours in your HMRC personal tax account.
PAYE income tax
Tax is deducted cumulatively: each month, payroll works out the tax due on your year-to-date pay and subtracts what you have already paid. That is why a pay rise mid-year, or returning to work after a gap, can produce odd-looking single months that correct themselves later.
National Insurance
Category A for most employees: 8% between £1,048 and £4,189 per month, 2% above. Unlike tax it is not cumulative, each pay period stands alone. Your category letter appears on the payslip; over state pension age it becomes C (no employee NI).
Pension
Auto-enrolment requires 8% of qualifying earnings in total, at least 3% from the employer. Watch which method your scheme uses: salary sacrifice saves you NI as well as tax, while relief at source takes contributions from net pay and adds 20% back automatically, higher-rate taxpayers must claim the rest via self-assessment, and some never do.
Student loan
Deducted only above your plan's threshold (Plan 2: £29,385/year in 2026/27) at 9% of the excess. If you are on the wrong plan, payroll deducts the wrong amount, check the plan letter on the payslip against your loan paperwork.
Three checks every April
- Tax code matches your HMRC account (especially after a job change or benefit change).
- Student loan plan letter is correct.
- Year-to-date figures on the March payslip match your P60.
To verify the numbers themselves, compare your payslip against the UK salary calculator, it states every assumption it makes, so differences point you to the cause.
Frequently asked questions
What does the W1 or M1 suffix on a UK tax code mean?
W1 (weekly) and M1 (monthly) indicate an emergency non-cumulative code, often applied after a job change. Tax is calculated on each pay period in isolation rather than on year-to-date earnings, which can cause over- or under-deductions until the code is corrected.
What is the difference between salary sacrifice and relief at source for pension contributions?
With salary sacrifice your contribution is taken before tax and NI are calculated, saving both. With relief at source it is deducted from net pay and 20% tax relief is added back automatically, but higher-rate taxpayers must claim the remaining relief through self-assessment.
How do I check that my student loan plan letter on my payslip is correct?
Compare the plan letter on your payslip against your student loan paperwork from the Student Loans Company. Plan 2 deductions run at 9% on earnings above £29,385 a year in 2026/27, so an incorrect letter means the wrong amount is deducted each month.
Last updated 2026-11-04.