Payslip Calculator
UK 2026/27

How Your Payslip Is Calculated

Your monthly payslip breaks down your gross salary into each deduction line by line. Income Tax is calculated using the PAYE cumulative system — your annual tax-free Personal Allowance (£12,570) is split across 12 months, and anything above is taxed at 20%, 40% or 45%.

National Insurance for employees in 2026/27 is 8% on earnings between £12,570 and £50,270, then 2% above that. Pension contributions (typically 5% minimum for auto-enrolment) are deducted either from gross or net pay depending on your scheme type.

Student loan repayments are calculated at 9% of income above your plan's threshold (6% for postgraduate loans). The threshold varies by plan — Plan 2 starts at £29,385, Plan 1 at £26,900, and Plan 4 (Scotland) at £33,795 for 2026/27.

What You Need to Know About Your Payslip

By law, your employer must provide a payslip showing gross pay, all deductions (with amounts), and net pay. Since April 2019, payslips must also show the number of hours worked if pay varies by time. Check your tax code (shown as 1257L for most people) — an incorrect code is the most common reason for unexpected deductions.

Your payslip may also show employer contributions to your pension and employer NI. These don't affect your take-home pay but are useful for understanding your total employment cost. If your payslip shows cumulative figures, these track your year-to-date totals and help ensure accuracy across the tax year.

Frequently Asked Questions

How to Read Your Payslip

Every line on a UK payslip has a specific meaning. Understanding each one helps you spot errors and plan your finances more accurately.

Gross pay is your total earnings before anything is deducted — your agreed salary plus any overtime, commission or bonuses earned in that pay period. This is the starting figure from which all deductions are calculated.

Income Tax (PAYE) is collected by your employer on behalf of HMRC using the Pay As You Earn system. Your tax code — most commonly 1257L for 2026/27 — determines your tax-free Personal Allowance of £12,570 per year (£1,047.50 per month). Any earnings above that are taxed at 20% (basic rate), 40% (higher rate above £50,270) or 45% (additional rate above £125,140).

National Insurance contributions for employees in 2026/27 are charged at 8% on earnings between £12,570 and £50,270 per year, and 2% on anything above that. NI funds state benefits including the NHS and State Pension.

Pension contributions under auto-enrolment require a minimum 5% employee contribution (your employer must add at least 3%). These are usually deducted from gross pay under a salary sacrifice or net pay arrangement, giving you immediate tax relief.

Student loan repayments are calculated as a percentage of earnings above your plan's repayment threshold. For Plan 1 (pre-2012 loans), repayments are 9% above £24,990. For Plan 2 (post-2012), the threshold is £28,470. Postgraduate loan deductions are 6% above £21,000. These figures are updated by HMRC each April.

Net pay (also called take-home pay) is what lands in your bank account — your gross pay minus Income Tax, National Insurance, pension, student loan and any other agreed deductions.

Year to Date (YTD) figures show cumulative totals since the start of the tax year on 6 April. Your payslip may list YTD gross pay, YTD tax and YTD NI alongside the monthly figures. These running totals are how HMRC reconciles your tax position — if you overpaid early in the year due to a wrong tax code, subsequent months will show a lower deduction to correct it.

Payslip Calculation Example — £35,000 Salary

To see how the numbers work in practice, here is a worked example for a full-time employee earning £35,000 per year in 2026/27, with tax code 1257L, no student loan, and a 5% pension contribution. All figures below are approximate and for illustration only.

The employer would also pay 3% pension (£87.50/month) and employer National Insurance on top of the gross salary, but these do not appear as deductions from the employee's pay. The above figures assume a standard relief-at-source pension arrangement. Salary sacrifice schemes may show different gross and net figures on the payslip but produce the same take-home result.

Why Your Net Pay Might Change Each Month

Even on a fixed annual salary, your monthly take-home pay can vary. Understanding the common causes means you will not be caught out by unexpected fluctuations.

Tax code changes are the most disruptive cause. If HMRC updates your tax code mid-year — for example, because you have started receiving a company benefit — your employer will apply the new code from the next pay run, which can produce a noticeably different deduction in one month.

Bonuses and commission increase your gross pay in the month they are paid, pushing up both Income Tax and National Insurance for that period. If a bonus tips you over the higher-rate threshold (£50,270), part of it is taxed at 40%.

Pension rate changes — for instance, increasing your voluntary contribution percentage — directly reduce your net pay from the month the change takes effect. Conversely, opting out of your pension scheme increases your take-home but reduces your retirement savings.

Benefits in kind such as a company car or private health insurance are treated as taxable income by HMRC. Their value is spread across the year as an adjustment to your tax code, which gradually reduces your monthly take-home rather than appearing as a cash deduction on your payslip.

Other less common causes include student loan threshold changes taking effect in April, overpayment corrections (where your employer recovers an accidental overpayment over several months), and one-off deductions such as salary advances or voluntary benefit schemes.

Checking Your Payslip Is Correct

Taking five minutes each month to review your payslip can prevent months of overpaid tax going unnoticed. Here is a simple checklist.

Check your tax code. For most people with one job and no untaxed income, the correct code for 2026/27 is 1257L. If your payslip shows a different code — such as BR (basic rate on all income), 0T (no personal allowance) or a number lower than 1257 — contact HMRC to confirm it is correct. An incorrect tax code is the most common source of overpaid or underpaid tax.

Verify your NI category. Most employees are in category A, which means the standard 8%/2% employee rates apply. If your payslip shows category B, C, H, J, M or Z, these are for specific groups (married women on reduced rates, employees over State Pension age, apprentices under 25, etc.). If you are unsure why your category is not A, speak to your HR or payroll department.

Confirm your pension deductions match the rate you agreed with your employer when you enrolled. If you increased your contribution, check the new percentage is reflected from the correct month.

Cross-check your YTD figures. Add up all previous net pay amounts from April and compare them to the YTD net figure on your latest payslip. If the totals do not match, ask payroll to explain the discrepancy.

If something still looks wrong after checking with payroll, you can verify your tax code and estimated tax bill directly via your Personal Tax Account on gov.uk or by calling HMRC on 0300 200 3300 (Monday to Friday, 8am to 6pm).