Why your UK payslip is smaller than you expect

It is a common shock: you accept a job at a certain salary, then your first payslip arrives and the amount in your bank is hundreds of pounds less than you expected.

Some of this is normal – tax, National Insurance and pensions – but sometimes mistakes do happen. Knowing what each line on your payslip means makes it easier to spot problems and ask questions.

This guide focuses on employees paid through PAYE in the UK.

Gross pay versus take home pay

A UK payslip will normally show:

• Gross pay – what you have earned before any deductions
• Deductions – tax, National Insurance, student loans, pension and any other items
• Net pay – what you are actually paid into your bank account

GOV.UK explains that employers must provide a payslip showing gross pay, deductions and net pay either on paper or electronically so you can see how your pay has been worked out. See: https://www.gov.uk/pay-and-work-rights/your-right-to-an-itemised-payslip

If you are on a salary, your gross monthly pay is usually your annual salary divided by 12. If you are paid hourly, gross pay is your hours worked multiplied by your hourly rate.

The gap between gross and net pay is made up of the deductions below.

Income Tax – PAYE and your tax code

Most employees pay Income Tax through Pay As You Earn (PAYE). Your employer uses your tax code to work out how much tax to take from your pay and send to HM Revenue and Customs (HMRC).

Key points from GOV.UK:

• Your tax code is usually a number plus a letter (for example 1257L).
• The number roughly shows how much tax free income you are entitled to in a year.
• Your employer multiplies this by 10 to work out your tax free allowance for PAYE purposes.

Official guidance: https://www.gov.uk/tax-codes and https://www.gov.uk/income-tax/how-you-pay-income-tax

Common reasons your tax bill may be higher than you expect include:

• being on an emergency tax code when you start a new job
• having more than one job or pension at the same time
• receiving taxable benefits from your employer (for example, a company car)

If you think your tax code is wrong, HMRC says you should contact them with details of your income so they can check and, if needed, issue a new tax code to your employer. See: https://www.gov.uk/tax-codes/what-your-tax-code-means

National Insurance contributions

On top of Income Tax, employees usually pay Class 1 National Insurance contributions (NICs) on their earnings above a certain threshold.

GOV.UK explains that:

• National Insurance helps build entitlement to the State Pension and some other benefits.
• Employees pay Class 1 NICs through PAYE, and employers pay their own separate contributions.
• You only pay NICs on earnings above the relevant threshold; if your pay is low enough you may pay no NICs at all in some periods.

See the National Insurance overview: https://www.gov.uk/national-insurance

Your payslip should show how much National Insurance has been deducted in the pay period. If you compare two payslips with different gross pay, you will often see NICs go up and down alongside tax.

Student loan and postgraduate loan deductions

If you went to university in the UK and took out student loans, you may see student loan and, in some cases, postgraduate loan deductions on your payslip.

GOV.UK and MoneyHelper explain that:

• You repay a fixed percentage of your income above a threshold, not the whole balance at once.
• The percentage is usually 9 percent for undergraduate plans and 6 percent for postgraduate loans.
• The threshold and plan type (Plan 1, 2, 4 or 5) depends on when and where you studied.
• Your employer makes these deductions automatically once your income is above the relevant threshold and sends them to the Student Loans Company.

See:

• How you repay: https://www.gov.uk/repaying-your-student-loan/what-you-pay
• Plan types: https://www.gov.uk/repaying-your-student-loan/which-repayment-plan-you-are-on

If you think you should not be repaying yet, or your plan type is wrong, you can contact the Student Loans Company. MoneyHelper has a plain English guide to how student loan repayments work alongside tax and National Insurance: https://www.moneyhelper.org.uk/en/family-and-care/student-and-graduate-money/how-to-deal-with-debts-after-graduation-from-university

Workplace pension contributions and auto enrolment

Since automatic enrolment was introduced, most employees are now put into a workplace pension scheme and pay contributions from their pay unless they opt out.

The Pensions Regulator and GOV.UK explain that:

• Employers must auto enrol eligible workers into a qualifying pension scheme.
• There is a minimum total contribution of 8 percent of qualifying earnings, of which the employer must pay at least 3 percent.
• The rest is taken from your pay, often helped by tax relief.

Official guidance: https://www.gov.uk/workplace-pensions and https://www.thepensionsregulator.gov.uk/en/employers

Your payslip should show your employee pension contribution (the amount you pay) and sometimes the employer contribution as well.

If your pension is taken by salary sacrifice, your contractual pay is reduced and the employer pays that amount into the pension on your behalf. GOV.UK confirms that salary sacrifice arrangements can reduce Income Tax and National Insurance because you are taxed on the lower post sacrifice salary. See: https://www.gov.uk/salary-sacrifice-and-the-effects-on-paye

This can make your payslip more complicated, but overall you may be better off than paying the same pension contribution from normal net pay.

Court orders and other enforced deductions

Sometimes, extra deductions appear on payslips because of court orders or other legal requirements. Common examples include:

• Attachment of earnings orders for County Court Judgments (CCJs)
• Direct Earnings Attachments for certain benefit overpayments
• Deduction from earnings orders for child maintenance

GOV.UK explains that an attachment of earnings order allows money to be taken straight from an employee's wages to repay a judgment debt. Employers must follow the instructions in the order and send the deducted money to the court or creditor. See: https://www.gov.uk/make-court-claim-for-money/enforce-a-judgment

The Child Maintenance Service can also ask employers to take child maintenance directly from wages using a deduction from earnings order. See: https://www.gov.uk/making-child-maintenance-arrangement/collect-and-pay

If these appear on your payslip unexpectedly, contact the organisation named on the order and get free debt advice from a charity such as National Debtline or StepChange.

Other deductions – union fees, season ticket loans and more

Your employer may also make voluntary deductions you have agreed to, for example:

• trade union membership fees
• repayments of a season ticket loan
• cycle to work schemes
• contributions to employee share schemes

Citizens Advice explains that employers should not make deductions from wages unless they are:

• required by law (for example, tax and National Insurance)
• allowed by your contract
• agreed in writing by you in advance

See: https://www.citizensadvice.org.uk/work/rights-at-work/pay/check-your-pay/

If you see a deduction you do not recognise and have not agreed to, you should raise it with your employer in writing. If it is not resolved, you can contact Acas or Citizens Advice for help.

How to check if your payslip is roughly right

You do not need to become a tax expert to do a basic check. Useful steps:

1. Check your gross pay
   Does it match your contract (salary divided by 12, or hours multiplied by your rate)?

2. Check your tax code
   Compare the code on your payslip with the code in your HMRC Personal Tax Account or the latest HMRC letter. If they differ and you do not know why, ask HMRC to explain.

   Personal Tax Account: https://www.gov.uk/personal-tax-account

3. Use a reputable pay calculator
   HMRC and MoneyHelper both provide guidance and links to calculators that estimate tax and National Insurance based on your earnings and tax code. Your exact number may differ slightly, but big differences are a warning sign.

4. Look for obvious surprises
   New student loan, pension or court order deductions should be explained to you. If a new deduction appears without warning, ask your employer what it is.

5. Keep copies of your payslips
   GOV.UK recommends keeping records in case you need to challenge tax, National Insurance or benefit decisions later.

What if you think you have been underpaid

If your net pay looks too low even after checking deductions:

• Raise it quickly with payroll or HR. Mistakes happen, especially when you join or change hours.
• Check your contract and timesheets. Make sure your hours, overtime, holiday pay and any enhancements (for example, night rates) have been included correctly.
• Know your minimum wage rights. GOV.UK and Acas set out the National Minimum Wage and National Living Wage rates. If deductions take you below the minimum wage in a pay period, your employer may be breaking the law.

Minimum wage guidance: https://www.gov.uk/national-minimum-wage and https://www.acas.org.uk/national-minimum-wage-entitlement

If your employer does not correct clear underpayments, you can get help from Acas, Citizens Advice or, in serious cases, report the issue to HMRC.

Where to get help understanding your payslip

If you are stuck, there are several reliable sources of free help:

• MoneyHelper – plain English guides on payslips, tax and deductions:
  https://www.moneyhelper.org.uk/en/work/working/payslips-explained

• GOV.UK – official information on tax, National Insurance, student loans and workplace pensions:
  https://www.gov.uk/income-tax
  https://www.gov.uk/national-insurance
  https://www.gov.uk/repaying-your-student-loan
  https://www.gov.uk/workplace-pensions

• Citizens Advice – help if you think you are not being paid correctly or are below the minimum wage:
  https://www.citizensadvice.org.uk/work/rights-at-work/pay/

• Acas – advice on pay disputes and workplace rights:
  https://www.acas.org.uk

• Debt advice charities – if deductions for court orders or arrears are leaving you short, organisations like National Debtline and StepChange can help you prioritise and negotiate.

Key points to remember

• Your payslip should always show gross pay, deductions and net pay so you can see how your pay is worked out.
• The main deductions are usually Income Tax, National Insurance, student loan repayments and pension contributions.
• Extra deductions can appear for court orders, child maintenance or agreed workplace schemes.
• Employers must not make unexplained or unauthorised deductions from your wages.
• If something does not look right, you can question it – starting with your employer and, if needed, HMRC, Acas or a free advice service.

Understanding the building blocks of your payslip will not increase your pay on its own, but it does give you the confidence to spot errors, challenge unfair deductions and make better decisions about things like pensions and tax codes.