How to Read Your UK Payslip (2026-27)

A UK payslip compresses four different systems — income tax, National Insurance, student loans, and workplace pensions — into a dozen cryptic lines. Each one follows different rules on different thresholds, which is why the deductions never quite move together when your pay changes. Here is what each line means and how to spot when one is wrong.

Your tax code — the line that controls everything

The standard code for 2026-27 is 1257L: multiply the number by 10 and you get your tax-free Personal Allowance, £12,570. PAYE spreads that allowance evenly across the year — about £1,048 per month is untaxed, and the rest is taxed through the bands. Codes worth a second look:

• BR / D0 / D1 — all income taxed at 20% / 40% / 45% with no allowance. Normal for a second job; a costly error on your only job.
• K codes — negative allowance: untaxed income (often a company benefit) exceeds the allowance, so extra is added to taxable pay.
• W1/M1 suffix — emergency, non-cumulative code, common after a job change; each month taxed in isolation. Usually self-corrects, but check it doesn't linger.
• S prefix — Scottish bands, which differ meaningfully from the rest of the UK — see our UK tax rates 2026-27 guide for both sets.

Income tax (PAYE)

In England, Wales and Northern Ireland: 20% on taxable income up to £37,700 above the allowance, 40% up to £125,140, 45% beyond. Two traps hide in there: above £100,000 the allowance itself erodes (£1 lost per £2 of income), producing a ~60% effective rate on the £100,000–£125,140 slice; and PAYE is cumulative, so a bonus month is taxed as if you earn that much every month — overpaid tax then unwinds across later payslips rather than being lost.

National Insurance

Employee (Class 1, category A) NI for 2026-27: 8% of pay between £12,570 and £50,270 a year, then 2% above that. Unlike PAYE, NI is calculated per pay period, not cumulatively — a one-off spike month pays more NI that never averages back out. That's also why NI and income tax react differently to the same bonus.

Student loan

The deduction is 9% of pay above your plan's threshold (6% for the Postgraduate Loan), taken per pay period. 2026-27 thresholds: Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000, Postgraduate £21,000. The most common payslip error in this section is being put on the wrong plan — Plan 2 vs Plan 5 changes the threshold by over £4,000, so check the letter, not just the presence, of the deduction.

Pension

Auto-enrolment makes a workplace pension the default, with a minimum of 8% of a band of qualifying earnings (at least 3% from your employer). Check how yours is taken: "net pay" and salary-sacrifice arrangements reduce taxable pay on the payslip itself, while "relief at source" takes contributions after tax and adds relief inside the pension. If your employer offers salary sacrifice, it's usually the most efficient of the three — our salary sacrifice guide shows the exact saving.

The 60-second monthly check

1. Tax code says 1257L (or you know why it doesn't).
2. No W1/M1 suffix more than a couple of months after a job change.
3. Student loan plan letter is correct.
4. Pension percentage matches what you elected, and the employer share appears.
5. Year-to-date figures grow consistently — they're what your P60 and any HMRC refund are built from.

Run your numbers

Check what your payslip should say with the UK Income Tax Calculator (PAYE, NI, and student loan together), or look your salary up directly in the UK take-home pay tables (£20,000–£150,000). Rates and thresholds are on GOV.UK. This is general education, not personalized tax advice.