How to read a UK payslip
A UK payslip shows your gross pay, the PAYE tax and National Insurance taken off, and any pension or student loan deductions. On £40,000 a year with a 5% pension and a Plan 2 student loan you take home about £2,481 a month in 2026/27. Here is what each line means, and the codes that matter most when you have just moved.
The lines on your payslip
| Line | What it means |
|---|---|
| Gross pay | Your pay for the period before anything is taken off, including overtime, bonus or commission |
| Tax code | Tells your employer how much tax-free pay to give you; most people have 1257L |
| Tax period | The week or month of the tax year: Month 1 is the month containing 6 April |
| National Insurance number | Your personal reference, two letters, six numbers and a final letter |
| NI category letter | Decides which National Insurance rates apply to you; most people are A |
| PAYE tax | Income Tax taken through Pay As You Earn |
| National Insurance | 8% of pay between £1,048 and £4,189 a month, and 2% above |
| Pension | Your workplace pension contribution, taken before or after tax depending on the scheme |
| Student loan | 9% of pay above your plan's threshold, or 6% for a postgraduate loan |
| Net pay | What reaches your bank account |
| Year to date (YTD) | Running totals since 6 April, which make it easy to check your P60 |
Worked example: £40,000 a year
England, tax code 1257L, NI letter A, monthly pay, 2026/27
| Gross pay | £3,333.33 |
|---|---|
| Pension (5%, net pay arrangement) | −£166.67 |
| PAYE tax (tax code 1257L) | −£423.83 |
| National Insurance (letter A) | −£182.87 |
| Student loan (Plan 2) | −£79.00 |
| Net pay | £2,480.97 |
Payroll works out each month on its own thresholds, so a real payslip can differ by a few pence. Check your own salary.
Your tax code
- 1257L: the standard code for one job, with the full £12,570 Personal Allowance.
- S or C in front (S1257L, C1257L): you are taxed at Scottish or Welsh rates.
- BR: all pay taxed at the basic rate, usually for a second job.
- D0 and D1: all pay taxed at the higher or additional rate.
- 0T: no tax-free allowance, often because your employer does not have your details yet.
- K: you owe tax on benefits or other income worth more than your allowance; no more than half your pay can be taken.
- M and N: you receive or have given away the Marriage Allowance.
Your National Insurance letter
| Letter | Who it is for |
|---|---|
| A | Most employees |
| B | Married women and widows with a valid certificate of election (reduced rate) |
| C | Employees over State Pension age: no employee NI |
| H | Apprentices under 25 |
| J | Employees who can defer because they already pay NI in another job |
| M | Employees under 21 |
| V | Veterans in their first civilian job |
| Z | Employees under 21 who can defer |
| F, I, L, S | Employees of a Freeport employer |
| N, E, D, K | Employees of an Investment Zone employer |
Employees pay 8% on pay between the primary threshold (£1,048 a month) and the upper earnings limit (£4,189 a month), and 2% above. Your employer pays 15% on top above £417 a month, which does not appear as a deduction on your payslip.
Student loan and pension lines
Student loan repayments are 9% of your pay above the plan threshold for each pay period: £2,241.66 a month for Plan 1, £2,448.75 for Plan 2, £2,816.25 for Plan 4 and £2,083.33 for Plan 5, rounded down to the pound. A postgraduate loan adds 6% above £1,750. Pension contributions appear either before tax (net pay arrangement or salary sacrifice) or after tax (relief at source, where your provider claims 20% back from HMRC).
P45, P60 and P11D
- P45: given when you leave a job, with your pay and tax so far and your tax code. Give it to your next employer.
- P60: your pay and tax for the whole tax year, by 31 May, if you are employed on 5 April.
- P11D: lists benefits in kind such as private health insurance or a company car, by 6 July.
Sources
- GOV.UK: What your tax code means
- GOV.UK: Emergency tax codes
- GOV.UK: National Insurance category letters
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: P45, P60 and P11D forms
- GOV.UK: Repaying your student loan
- Our methodology and the full list of sources for the calculator
Frequently asked questions
What does 1257L mean on my payslip?
It is the standard tax code: 1257 is your £12,570 tax-free Personal Allowance with the last digit removed, and L means you get the standard allowance. It is used for most people with one job.
Why is my first UK payslip taxed so much?
Usually because your employer has no P45 or starter checklist from you and uses an emergency tax code such as 1257L M1 or 0T. Give payroll a starter checklist and the overpaid tax comes back in later payslips, or at the end of the tax year.
When do I get a P60?
Your employer must give you a P60 by 31 May if you work for them on 5 April. It shows your total pay and tax for the tax year that just ended.
This guide explains the general rules for employees and is not personal tax advice. Rules change and individual situations differ, so check with the tax authority or a tax adviser before making decisions. Spotted something out of date? Email [email protected].