How Do I Read a UK Payslip? (2026/27 Anatomy Guide)

Gross earnings, every variable deduction (PAYE income tax, which moves pay-period to pay-period), every fixed deduction (typically pension), net pay, the method of payment, and the number of hours worked where pay varies by hours. Section 8 of the ERA 1996^[1] was extended to cover workers (not just employees) in April 2019, bringing roughly 1.2 million agency workers into scope.

PAYE income tax in England, Wales, and Northern Ireland: 0% on the first £12,570, 20% on £12,571–£50,270, 40% on £50,271–£125,140, 45% above. Scottish taxpayers^[5] use Holyrood bands (starter, basic, intermediate, higher, advanced, top). National Insurance Category A: 8% on £1,048–£4,189/month, 2% above. Pension auto-enrolment minimum: 5% employee plus 3% employer on qualifying earnings £6,240–£50,270/year. Student loan Plan 5: 9% above £25,000/year; other plans use different thresholds. The replacement P60 guide covers how lenders verify these figures against HMRC records.

Gross pay is everything you earn before deductions; net pay is what reaches your bank after them. Section 8 of the ERA 1996^[1] requires the payslip to show both, plus every deduction in between. The usual deductions that sit between gross and net, top to bottom:

• Income tax (PAYE): your tax code applied against the 2026/27 bands above your £12,570 Personal Allowance.
• National Insurance: 8% on monthly earnings between £1,048 and £4,189 for Category A, then 2% above.
• Pension: auto-enrolment minimum 5% of qualifying earnings^[4], deducted before or after tax depending on the scheme.
• Student loan: a percentage of pay above your plan threshold, where applicable.

The order matters for your tax. A salary-sacrifice or net-pay pension comes out of gross before income tax is worked out, so your taxable pay, and your tax, fall. A relief-at-source pension^[7] comes out after tax, with HMRC topping up the relief into the pension. Same headline 5%, different effect on net pay. This is why two people on identical salaries can take home different amounts.

PAYE and student loan are cumulative from 6 April, so year-to-date is what HMRC and lenders reconcile against, not a single month. Sum the period figures across every payslip in the tax year; the total must equal the year-to-date on your latest payslip. A gap usually means a missing or duplicated payslip, or a mid-year tax code change. How PAYE works in 2026/27 explains the cumulative calculation.

It is fixed by section 4 of the Income Tax Act 2007^[10], and the odd dates are a leftover of the 1752 calendar reform. The old tax year started on Lady Day, 25 March. In 1752 Britain dropped 11 days to adopt the Gregorian calendar; to avoid losing tax on those days the Treasury pushed the year-end to 5 April, and an 1800 adjustment moved the start to 6 April. This matters on the payslip because 6 April is the reset: your £12,570 Personal Allowance refreshes in full, year-to-date gross, tax and NI return to nil, cumulative PAYE recalculates (which is why a tax-code change often lands in April), and new Budget rates take effect.

A P11D reports taxable benefits (company car, private medical) to HMRC by 6 July^[9] after the tax year, most of them taxable under ITEPA 2003^[8]. A benefit in kind is something of value your employer gives you that is not cash. HMRC usually collects the tax by lowering your tax code, not by taking it from one payslip, so a £6,000 company-car benefit shrinks your tax-free allowance and more of your salary is taxed across the year. That is why your take-home can drop even though your gross salary has not moved. Your employer also pays Class 1A National Insurance on most benefits, charged at 15% for 2026/27 on the P11D(b); you pay income tax only, not employee NI. HMRC plans to make payrolling of benefits mandatory from April 2027 (phased, starting with cars, fuel, vans and medical cover), which will replace the annual P11D for those benefits.

Common P11D items, each valued under ITEPA 2003 rules:

• Company cars and the fuel provided with them
• Private medical and dental insurance
• Interest-free or low-interest loans above £10,000
• Living accommodation provided by the employer
• Assets given to the employee, such as a phone kept personally

Yes, all three. Since April 2019 ERA 1996 s.8^[1] covers every worker, not just employees, and where pay varies by hours the payslip must also show the hours worked^[13]. The payslip right is identical across the three; only the party that runs the payroll changes. The agency (or its provider) issues an agency worker's payslip; the umbrella company, which is your employer for PAYE, issues an umbrella payslip; the engaging employer or agency issues a zero-hours payslip showing the hours worked that period. Since 6 April 2020 an agency must also give you a Key Information Document before you agree terms, showing the assignment rate, deductions, and an example take-home, and your first payslip should reconcile to it.

Employer's NI, the Apprenticeship Levy, and the employer pension are the employer's costs. Taking any off your gross, rather than the assignment rate, unlawfully shifts the employer's cost onto you. A compliant umbrella payslip passes all four:

• The assignment rate is shown at the top, not just your gross.
• Employer costs (employer NI, the levy, employer pension) sit above the gross line, met from that rate.
• The umbrella margin is disclosed as a named line, not hidden.
• Every deduction is itemised, and the top-line rate reconciles down to your gross.

The Finance Act 2026 added a new Chapter 11 to ITEPA 2003, with equivalent National Insurance rules. For payments made on or after 6 April 2026, liability is agency-first: the UK recruitment agency that contracts with the end client is now jointly and severally liable with the umbrella company for unpaid PAYE and National Insurance. Only where there is no UK agency in the chain, or the contracting party is outside the UK, does the end client carry that liability instead. To report a non-compliant umbrella, use HMRC for tax non-compliance, the Fair Work Agency for agency conduct, and Acas for a pay dispute.

Only to reconstruct a genuine past record from figures actually paid, such as a lost payslip. Inventing pay you never received is fraud by false representation^[15], and lenders verify every figure against HMRC. Recreating a past-month payslip from figures you genuinely earned, because the original was lost or never issued, is legitimate record-keeping. Work from the real numbers: confirm the gross, tax, and National Insurance for that period against your HMRC Personal Tax Account^[17] Pay and Tax History, or ask your employer's payroll, then rebuild the payslip with the correct historical date. Fabricating income does not work anyway, because a fabricated figure will not match the Real Time Information^[16] feed employers already send HMRC, which is exactly the mismatch lenders catch when they verify a payslip or P60 against HMRC records. Beyond the failed application, making a false document to gain money can carry a CIFAS marker for years.

Work top down: confirm gross matches your contract and the hours shown, then check each deduction against the rules, income tax bands^[2], NI thresholds^[3], your pension rate and student-loan plan. Net pay should equal gross minus the lot, and must match the credit in your account on payday. If it does not reconcile, the cause is usually a wrong tax code or NI category.