Latest column from Denbighshire Citizens Advice is:
Q: I’ve
just got my first payslip from a new job, I’m slightly embarrassed to say I
don’t understand what all the different sections refer to. How do I know what
each means and if it’s correct?
A: Congratulations
on the new job, hopefully you’re settling into the new role.
There’s
no need to be embarrassed about not understanding your payslip, it contains
lots of information which can be tricky to get your head around but it is
important to understand. Your payslip shows your pay, deductions and tax
information. All employers are required to give their employees a payslip and
it’s a good idea to keep them for as long as possible.
The
top left corner of your payslip is where you’ll usually find your employer’s
details. Opposite this, in the middle or top right corner, should be your
details. This is also where you might find your payroll or employee number,
this is what your employer uses to identify you for payroll purposes.
Next,
you’ll see lots of different numbers and codes. The payment date is when your
pay will normally arrive in your bank account, it can be monthly or weekly and
fall on any day of the month.
Your
National Insurance (NI) number refers to your unique number. You must have a NI
number to work in the UK. It’s used to make sure all your NI contributions are
recorded and so you can get any state benefits you’re entitled to, including
state pension later in life.
Your
payslip might show a tax period, the tax year starts in April and ends in
March. The number here corresponds to the period in which you’re being taxed,
eg. if you’re paid monthly, 01 will represent the tax period in April, while 12
would mean March.
Next
is your tax code. This is decided by HM Revenue and Customs (HMRC) and is used
by your employer or pension provider to work out how much Income Tax to take
from your pay. Your tax code is made up of several numbers and a letter. The
numbers refer to how much tax-free income you get while the letters can mean
different things depending on your circumstances. You can find out what they
mean on the government
website.
Make
sure you’re not on an emergency tax code otherwise you’ll be taxed more than
needed.
Now
to your pay and deductions. Gross pay, means how much you’ve earned before
anything is deducted. Deductions are amounts taken from your gross pay, common
ones include: income tax, national insurance, pension or student loan payments.
Income tax is the tax you pay on your earnings to fund public services, this is
something you have to pay but the amount will vary depending on your earnings.
You pay National Insurance so you can be entitled to certain benefits, and it
also contributes towards the NHS.
Most
payslips will add up all the deductions from your pay into a single amount to
make it easier for you to see how much is taken from your pay each month. Your
net pay is the amount of money you will receive after all the deductions have
worked out.
Lastly,
taxable pay is the amount of your salary, to date in the current tax year, that
has been subjected to tax. This will usually appear next to your net pay
figure.
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