What is a payslip?

Published Tuesday 7 July 2026

Table of contents

• What is a payslip?
• Why are payslips important?
• Are employers required to provide payslips in the UK?
• What must be on a payslip?
• How to read your payslip
• What is a tax code?
• What is an emergency tax code?
• What is the difference between gross and net pay?
• How long should you keep your payslips?
• What to do if there is a problem with your payslip
• Simplify payroll with Xero
• FAQs on payslips

Key takeaways

• A payslip is a document your employer must give you each payday, showing your gross pay, deductions for tax and National Insurance, and your net (take-home) pay.
• Under the Employment Rights Act 1996, all employees and workers in the UK have the legal right to receive an itemised payslip, whether in paper or electronic form.
• Checking your payslip regularly helps you spot errors in your tax code, confirm your pension contributions are correct, and keep records you may need for mortgage or loan applications.
• If something on your payslip looks wrong, your first step is to speak with your employer's payroll team, and you can contact HMRC directly for tax code queries.

What is a payslip?

A payslip is a written statement your employer gives you each time you're paid. It breaks down exactly how your pay has been calculated, showing what you've earned and what's been deducted before the money reaches your bank account.

Payslips cover income from salary, hourly wages, or commission. They also list deductions and contributions such as:

• income tax deducted through Pay As You Earn (PAYE)
• National Insurance contributions (NICs)
• pension contributions
• student loan repayments
• any other deductions your employer is required or authorised to make

You might also hear payslips called wage slips, pay stubs, pay advice, or itemised pay statements. If you need to create one, you can download a free payslip template to get started. They all refer to the same document.

With wages among UK small businesses growing by 2.7% year-on-year in late 2025, and hospitality wages rising 3.6%, according to Xero Small Business Insights, payslips play a key role in helping employees track how their earnings change over time.

Traditionally, payslips were paper documents attached to a physical cheque or included in a pay envelope. Today, most employers provide electronic payslips by email or through an online portal.

Why are payslips important?

Payslips aren't just a legal requirement. They're a valuable record that serves several practical purposes for both employers and employees.

• Proof of earnings: lenders, landlords, and mortgage providers often ask for recent payslips as evidence of income
• Financial planning: seeing a clear breakdown of pay and deductions helps with budgeting and tracking changes over time
• Accuracy checks: payslips let you confirm that the correct tax code is being applied and that deductions match what you'd expect
• Compliance: providing accurate, itemised payslips keeps your business on the right side of UK employment law

If you run a small business, providing clear payslips builds trust with your team and reduces the chance of disputes about pay. For a step-by-step guide to paying employees, see the Xero guide.

Are employers required to provide payslips in the UK?

Yes. Under the Employment Rights Act 1996, all employers in the UK must give their employees an itemised payslip on or before each payday. This applies to full-time, part-time, and zero-hours contract workers.

Since April 2019, the right to a payslip was extended to include workers as well as employees. This means agency workers and casual workers are also entitled to receive one.

There are a few exceptions. Members of the armed forces, the police service, and share fishers are not covered by this requirement. Self-employed individuals don't receive payslips either, as they invoice for their services rather than being paid through a payroll system.

Payslips can be provided in paper or electronic format. There's no legal requirement to use one over the other, so you can choose whichever method works best for your business.

What must be on a payslip?

UK law sets out the minimum information that every payslip must include. Getting this right is essential if you're running payroll for your business.

Every payslip must show:

• gross pay (the total amount earned before any deductions)
• net pay (the amount the employee actually receives)
• variable deductions, with the amount and purpose of each (for example, income tax, National Insurance)
• fixed deductions, either itemised on each payslip or covered by a standing statement of fixed deductions

If an employee's pay varies based on hours worked, the payslip must also show the number of hours. Where pay is split across different payment methods (for example, part bank transfer and part cash), each amount must be listed separately.

Many employers include additional details such as the employee's tax code, National Insurance number, payroll number, and year-to-date totals. While not all of these are legally required, they help employees understand their pay and make it easier to spot errors.

How to read your payslip

Payslips can look complex at first glance, but each section serves a clear purpose. Here's what the main elements mean.

Personal details

Your payslip will show your name, and often your job title and employer's name. These help confirm the payslip belongs to you and identify the paying organisation.

Payroll number

This is a unique reference your employer assigns to you for their payroll system. It's used internally to track your pay records.

Tax period

The tax period shows which week or month of the tax year your pay relates to. The UK tax year runs from 6 April to 5 April. For example, "Month 1" covers 6 April to 5 May.

Tax code

Your tax code tells your employer how much income tax to deduct from your pay. It's set by HM Revenue and Customs (HMRC) based on your personal allowance and any adjustments. The most common code for the 2025/26 and 2026/27 tax years is 1257L.

National Insurance number

Your NI number is your personal identifier for the National Insurance and tax system. It ensures your contributions are recorded correctly against your name.

Gross pay

This is your total earnings before any deductions. It includes your basic salary or hourly pay, plus any overtime, bonuses, or commission you've earned in the pay period.

Deductions

Deductions are amounts taken from your gross pay. The main ones are:

• income tax: collected through PAYE, based on your tax code
• National Insurance contributions: calculated on earnings above a set threshold
• pension contributions: your share of workplace pension payments under auto-enrolment
• student loan repayments: deducted once your earnings exceed the repayment threshold for your plan type

Some payslips also show employer contributions to your pension or National Insurance. These don't reduce your take-home pay but give you the full picture of the cost of your employment.

Net pay

Net pay is your take-home pay after all deductions have been made. This is the amount that lands in your bank account on payday.

What is a tax code?

Your tax code is a combination of numbers and letters that tells your employer how much income tax to deduct from your pay each period. HMRC assigns your code based on your tax-free personal allowance and any adjustments.

The most common tax code for the 2025/26 and 2026/27 tax years is 1257L. The "1257" represents a personal allowance of £12,570, and the "L" means you're entitled to the standard tax-free allowance.

Other letter codes indicate specific circumstances:

• BR: all income is taxed at the basic rate (usually for a second job)
• D0: all income is taxed at the higher rate
• K: you owe more tax than your allowance covers, so extra is collected through your pay
• M: you've received a transfer of 10% of your partner's personal allowance through Marriage Allowance
• N: you've transferred 10% of your personal allowance to your partner

If your tax code looks unfamiliar, you can check it on your personal tax account on GOV.UK or contact HMRC.

What is an emergency tax code?

An emergency tax code is a temporary code your employer uses when HMRC hasn't yet confirmed your correct tax code. This typically happens when you start a new job, return to employment after a gap, or were previously self-employed.

Emergency tax codes for the 2025/26 and 2026/27 tax years include 1257L W1, 1257L M1, and 1257L X. The "W1" or "M1" suffix means your tax is calculated on a week-by-week or month-by-month basis, without accounting for your cumulative earnings and allowances for the year so far.

This can mean you pay more tax than you should in the short term. Once HMRC sends your employer the correct code, your tax should be adjusted automatically. If you think an overpayment hasn't been corrected, you can contact HMRC to request a review.

What is the difference between gross and net pay?

The difference between gross and net pay is straightforward, but it's one of the most common sources of confusion on payslips.

Gross pay is the total amount you earn before any deductions. It includes your basic salary or hourly wages, plus any overtime, bonuses, commission, or other payments for the period.

Net pay is what's left after all deductions have been taken. These typically include income tax, National Insurance contributions, pension contributions, and any student loan repayments. Net pay is your take-home amount.

For example, if your gross pay for the month is £2,500 and your total deductions come to £600, your net pay would be £1,900.

How long should you keep your payslips?

It's a good idea to keep your payslips for at least 22 months, which is the time limit for making most employment tribunal claims. Many financial advisers suggest holding onto them for longer.

Payslips contain sensitive information such as your National Insurance number, so store them securely, whether that's in a locked drawer or a password-protected digital folder.

You might need your payslips as evidence when:

• applying for a mortgage or loan
• renting a property
• checking your State Pension record
• resolving a tax query with HMRC

If you're an employer, you're required by law to keep payroll records for at least 3 years after the end of the tax year they relate to. Learn more about managing small business payroll in the UK.

What to do if there is a problem with your payslip

If something on your payslip doesn't look right, there are clear steps you can take to resolve it.

Start by speaking to your employer's payroll or HR team. Most payslip errors are caused by simple data entry mistakes or outdated information, and your payroll team can usually correct them quickly.

If the issue is with your tax code, you can contact HMRC directly. Your employer doesn't set your tax code; HMRC does. You can check and update your code through your personal tax account on GOV.UK.

If your employer refuses to provide a payslip or repeatedly issues incorrect ones, you can raise a formal grievance. As a last resort, you have the right to take the matter to an employment tribunal.

Simplify payroll with Xero

Running payroll doesn't have to be complicated. With the right software, you can generate accurate, compliant payslips automatically and spend less time on admin.

Xero payroll calculates PAYE, National Insurance, and pension contributions for you, then produces clear payslips your employees can access online. It also handles Real Time Information (RTI) submissions to HMRC, so you stay on top of your obligations without the manual effort. Get one month free.

FAQs on payslips

Here are some frequently asked questions about payslips.

Can my employer give me an electronic payslip instead of a paper one?

Yes. UK law allows employers to provide payslips in either paper or electronic format. There's no legal requirement to offer a paper copy unless your employment contract specifies one.

Do freelancers and contractors receive payslips?

Self-employed freelancers and independent contractors don't receive payslips because they're not on an employer's payroll. They invoice for their work and manage their own tax through Self Assessment.

What is a payroll number?

A payroll number is a unique reference your employer assigns to you within their payroll system. It helps them track your pay records and is different from your National Insurance number.

How often should I check my payslip?

Check your payslip every time you're paid. This helps you spot errors early, such as a wrong tax code, missing overtime, or incorrect deductions.

Can I use my payslips as proof of income for a mortgage?

Yes. Most mortgage lenders ask for your 3 most recent payslips as part of the application process. Keeping your payslips organised makes this straightforward.