UK payslip deductions explained

PAYE Income Tax

Your employer normally deducts Income Tax through PAYE using your tax code. The code can reflect allowances and adjustments, while BR, D, 0T and K codes can produce very different results from a standard allowance code.

Employee National Insurance

Class 1 employee NI is calculated separately from Income Tax. For most Category A employees it uses pay-period thresholds and rates, so it should not be checked by simply applying an annual Income Tax percentage.

Workplace pension

A pension deduction may be shown separately. The effect on tax and NI depends on how the pension scheme is operated — for example salary sacrifice, net pay arrangement or relief at source — so do not assume the figure affects every tax calculation in the same way.

Student and postgraduate loans

Payroll can deduct student-loan and postgraduate-loan repayments when earnings exceed the applicable payroll threshold. The amount depends on the plan and the earnings used for that pay period.

Other deductions

Payslips can contain items such as union subscriptions, attachment orders, season-ticket repayments or other agreed deductions. Fixed deductions must be explained either on the payslip or through the required written information.

When a deduction looks wrong

Check the payslip against your contract or deduction agreement first. For PAYE, compare your tax code with HMRC. For an unexplained deduction, raise it with your employer or payroll team so they can explain or correct it.

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