A payslip has three parts: what you were paid, what was taken off, and what is left. By law it has to show your gross pay, the amount and purpose of every deduction that varies, and the net amount reaching your bank. Everything else on it, including your tax code, your National Insurance category letter and the year-to-date totals, is there so you can check that the deductions are right.
What has to be on it by law
Your employer must give you a written itemised pay statement at or before the time you are paid. The Employment Rights Act sets out what it must contain: your gross wages or salary, the amount and purpose of each variable deduction, the amount of fixed deductions, the net amount payable, and, where the payment is split between different methods, the amount and method of each part.
Since April 2019 there is one more requirement. Where your pay varies by the time you have worked, the payslip must also show the number of hours paid, either as a single total or broken down by the different rates.
Employers are free to show more, and most do: a payroll number, the pay date, the tax period, your tax code, your National Insurance number and category letter, and running totals for the tax year. None of that is decoration. It is the evidence you need if a figure looks wrong.
A worked month, line by line
Take a salary of £30,000 a year on code 1257L, paid monthly. The first payslip of the tax year reads like this.
Basic pay is £2,500.00. That is the gross figure everything else is worked from, before anything is taken off.
Free pay is £1,048.26. This is the slice of the month your tax code lets you have tax-free. Payroll does not reach it by one division: HMRC's tax tables split the code into parts, work out each part's value for the period and round each one up to the penny, then add them, which is why the figure is rarely round and why dividing your allowance by twelve can leave you a penny out.
Taxable pay is £1,451.00. That is the basic pay less the free pay, rounded down to a whole number of pounds, which is what HMRC's own tax tables instruct. Income tax is charged on that figure and comes to £290.20 for the month.
National Insurance is £116.16. It is worked out from a different set of thresholds and takes no notice of your tax code at all.
Net pay is £2,093.64. That is the figure that reaches your bank.
The income tax line
PAYE is normally cumulative, which means each pay day your employer looks at your pay and tax for the whole year so far, works out the tax due on the year to date, and deducts the difference. That is why the tax on a month with no overtime can still move, and why an over-deduction earlier in the year corrects itself without anyone asking.
If your code is followed by W1, M1 or X, that has been switched off and each pay period is taxed on its own. The month then gets one period of allowance and no memory of the rest of the year.
The tax code itself is the only instruction your employer has about your allowances. Employers apply the code HMRC sends and cannot change it, so a wrong tax line is almost always a wrong code rather than a payroll error.
The National Insurance line
National Insurance is charged on the earnings of that pay period, against thresholds prescribed for the period rather than for the year. On a monthly payroll for 2026/27, nothing is due on the first £1,048. Above that, the main rate of 8% applies up to £4,189 for the month, and pay above that is charged at 2%.
Two consequences follow. A month with a large bonus can pay a lot of National Insurance and a quiet month can pay none, with no end-of-year reconciliation between them. And two separate jobs each get their own threshold, because the charge is per employment.
The category letter beside it says which set of rates applies to you. Most employees are on the standard letter; different letters cover people over State Pension age, under 21, apprentices under 25 and several employer reliefs.
Pension, student loan and the other deductions
A pension contribution appears in one of three ways, and which one you are on changes the other lines. Under salary sacrifice your gross pay is lower before anything else happens, so tax and National Insurance are both worked out on the reduced figure. Under a net pay arrangement the contribution comes off before income tax but not before National Insurance. Under relief at source it comes off after tax, and the scheme reclaims basic-rate relief for you.
A student loan line is a share of the pay above the threshold for the pay period, and it is always a whole number of pounds, because the pence in the answer are ignored.
Anything else deducted has to be authorised: a union subscription, a season ticket loan, a charity payment under Payroll Giving, or an attachment of earnings order. Each has to be named on the payslip if it varies, and the fixed ones must at least be totalled.
The year-to-date columns
The running totals are the most useful figures on the page and the least read. They show what you have been paid and what has been deducted since 6 April, and they are what cumulative PAYE is actually working from.
Three checks are worth doing once a year. Does the year-to-date gross match what you expected to have been paid by now? Does the year-to-date tax look like a twelfth of a sensible annual figure, multiplied by the months so far? And does the final payslip of the year agree with your P60, which is the same information certified at the year end?
Why a payslip can differ from a calculator
A calculator works out a whole year and divides it. Payroll works out one period at a time using the thresholds prescribed for that period, so the two can differ by pennies even when everything is right, and by much more when a month is unusual.
The common causes are a mid-year start, a non-cumulative code, a bonus or overtime in one period, a pension arrangement that is not the one you assumed, and a pay period that is neither a week nor a month. Each of those has a different signature on the payslip.
How long to keep them
Keep them until you have checked them against your P60 for that tax year, and keep the P60 for longer. A payslip is the only contemporaneous record of the tax code that was used, the pay period it applied to and the year-to-date position at that moment, and none of that can be reconstructed afterwards if a code turns out to have been wrong.