A UK payslip looks simple, three or four deduction lines below a gross figure, but each line hides a rule that can cost you hundreds of pounds a year if you miss it. The most common: a wrong tax code that overcharges you for months before HMRC reconciles it.
This guide walks through every standard line on a UK PAYE payslip for the 2026/27 tax year, with hand-checkable maths.
The structure of a UK payslip
Every payslip has four sections:
- Earnings: salary, bonuses, overtime
- Pre-tax deductions: pension contributions, salary sacrifice items
- Statutory deductions: PAYE income tax, National Insurance, Student Loan
- Post-tax deductions: charitable Give As You Earn, union dues, season ticket loan
Net pay = gross, pre-tax deductions, statutory deductions, post-tax deductions.
Your tax code (the most important line)
The tax code appears at the top of every payslip, usually something like 1257L. The numeric part times 10 = your Personal Allowance for the year. 1257 means £12,570 of tax-free income, the 2026/27 standard.
Letter suffixes:
- L: standard, you get the full Personal Allowance.
- M: Marriage Allowance recipient, +£1,260 to Personal Allowance.
- N: Marriage Allowance transferor, -£1,260.
- BR: Basic Rate, every pound taxed at 20% (used for second jobs).
- D0: Higher Rate, every pound at 40% (rare, second income above £50,270).
- D1: Additional Rate, 45% (very high earners).
- K: K-coded, deductions exceed allowances, untaxed income added back.
- 0T: No allowance, every pound taxed at the marginal rate.
If you start a new job without a P45 and your employer has to use an emergency code (1257L W1/M1 or 0T W1/M1), you’ll be taxed on a non-cumulative basis until HMRC catches up. This means your first month or two might over-withhold significantly.
Action: always submit your P45 to a new employer. If you don’t have one, complete the Starter Checklist so the employer uses the right code from day one.
PAYE income tax
UK Income Tax for England, Wales and Northern Ireland in 2026/27 has three bands above the Personal Allowance:
| Band | Rate | Range (after PA) |
|---|---|---|
| Basic | 20% | £0, £37,700 |
| Higher | 40% | £37,701, £125,140 (taper-affected) |
| Additional | 45% | Above £125,140 |
Scotland has six bands instead of three (starter 19%, basic 20%, intermediate 21%, higher 42%, advanced 45%, top 48%), set by the Scottish Government and administered by HMRC.
The Personal Allowance taper (60% effective band)
The Personal Allowance reduces by £1 for every £2 over £100,000 of adjusted net income. Fully eliminated at £125,140. This creates a brutal 60% effective marginal rate on income between £100K and £125,140:
- £1 of additional income, taxed at 40%, and removes 50p of allowance which would have been tax-free at 40%.
- Effective marginal: 40% + (50p × 40%) = 60%.
This is the single biggest tax planning trap for UK higher earners. Common mitigations:
- Push pension contributions to bring adjusted net income below £100K.
- Take a salary sacrifice cycle-to-work or EV scheme to reduce adjusted income.
- Time bonuses to spread across tax years.
Our UK Income Tax Calculator shows the taper effect for any income.
National Insurance (Class 1)
Employee Class 1 NI for 2026/27:
- 8% between Primary Threshold (£12,570/yr) and Upper Earnings Limit (£50,270/yr)
- 2% above the Upper Earnings Limit
The 8% main rate dropped from 10% in 2024 (Spring Statement) to 8% in late 2024. Verify against the current HMRC rate.
NI is calculated per-pay-period, not cumulatively, which can create odd outcomes if your income varies dramatically through the year (a big bonus month gets hit hard, even if your annualised income wouldn’t reach the Upper Earnings Limit).
Self-employed pay Class 4 NI on profits via Self-Assessment, with similar rate bands.
Use the UK National Insurance Calculator for any salary.
Pension contributions
UK workplace pensions are typically Auto-Enrolment, mandating minimum 8% total contribution (5% employee + 3% employer) on qualifying earnings (£6,240, £50,270 in 2026/27).
There are two pension contribution mechanisms with different tax treatment:
Net Pay arrangement
Contribution comes off gross salary BEFORE income tax. The full marginal rate of tax relief is automatic.
Relief at Source (RAS)
Contribution comes off NET salary, the pension provider claims 20% relief from HMRC, and higher/additional rate taxpayers must claim the extra 20-25% via Self-Assessment.
Most workplace pensions are Net Pay. Stakeholder/personal pensions are RAS. The annual allowance is £60,000 (2026/27), tapered for high earners, see our Pension Contribution Calculator.
Student Loan repayment
UK Student Loans appear as a payslip line once your income exceeds the plan-specific threshold:
| Plan | Annual threshold (2026/27) | Repayment rate |
|---|---|---|
| Plan 1 (pre-2012 England/Wales, NI) | £22,015 | 9% |
| Plan 2 (2012-2023 England/Wales) | £27,295 | 9% |
| Plan 4 (Scotland) | £27,660 | 9% |
| Plan 5 (from 2026/27 in England) | £25,000 | 9% |
| Postgraduate | £21,000 | 6% |
Multiple loans: you repay against the most recent (highest-rate). Postgraduate loans stack with undergraduate plans.
Salary sacrifice
The most powerful UK income-tax planning tool. By giving up gross salary in exchange for an employer benefit (pension, cycle-to-work, EV lease, gym membership), you avoid Income Tax AND National Insurance on the sacrificed amount.
Effective saving at the 40% Higher Rate band: 40% + 2% (NI above UEL) = 42% net saving per £1 sacrificed. At the 60% effective rate band (£100K-£125,140): up to 62% net saving.
Common items eligible: workplace pension, cycle-to-work, EV salary sacrifice, childcare vouchers (closed to new entrants 2018), additional annual leave purchase.
Worked example
Software developer in London, 2026/27:
- Base salary: £75,000
- Pension contribution (Net Pay, 5%): £3,750
- Plan 2 Student Loan
Net taxable pay: £75,000 - £3,750 = £71,250
| Line | Calculation | Amount |
|---|---|---|
| Personal Allowance | Full (income below £100K) | £12,570 |
| Taxable income | £71,250 - £12,570 | £58,680 |
| Basic Rate (20% on £37,700) | £37,700 × 20% | £7,540 |
| Higher Rate (40% on £20,980) | £20,980 × 40% | £8,392 |
| Total PAYE | £15,932 | |
| NI on (£50,270 - £12,570) × 8% | £3,016 | |
| NI on (£71,250 - £50,270) × 2% | £420 | |
| Total NI | £3,436 | |
| Student Loan: (£71,250 - £27,295) × 9% | £3,956 | |
| Net annual | £71,250 - 15,932 - 3,436 - 3,956 | £47,926 |
| Net monthly | / 12 | £3,994 |
Sanity check our UK Take-Home Pay Calculator for any salary.
Common UK payslip mistakes
Wrong tax code at job change. Common because employers default to emergency codes. Submit P45 promptly.
Marriage Allowance not transferred. Couples where one earns under £12,570 can transfer £1,260 to the higher earner, but it requires an HMRC application.
Missed higher-rate pension relief. If your pension is RAS and you’re a higher-rate taxpayer, you must claim the extra 20-25% via Self-Assessment, it doesn’t automatically appear.
Crossing into the 60% effective band without planning. £100K-£125,140 of income is the highest-marginal-rate band in the UK system due to taper. Always be aware.
Plan 5 vs Plan 2 confusion. New England undergraduate students from September 2023 are on Plan 5, with a lower threshold but 40-year repayment term.
Primary sources
- HMRC Income Tax Rates, 2026/27 bands
- HMRC National Insurance Rates, Class 1 NI bands
- GOV.UK PAYE Manual, tax code reference
- Student Loan Repayment Plans, 2026/27 thresholds