PAYE, NI, Plan 2, pension, tax code 1257L, your payslip looks like a maths exam you didn't study for. Enter your details and we'll explain every line in plain English.
A UK payslip typically shows your gross pay (the amount before deductions), each individual deduction, and your net pay (what reaches your bank). The deductions usually include income tax (PAYE), National Insurance, any student loan repayments, and pension contributions. Some payslips also show year to date totals, your tax code, and your National Insurance number. The numbers should match: gross pay minus all deductions equals net pay.
Tax code 1257L is the standard UK tax code for most employees in 2025/26. The 1257 represents your personal allowance (£12,570) divided by 10, meaning you can earn £12,570 before paying income tax. The L means you are entitled to the standard tax free personal allowance. Other common codes include BR (basic rate, all income taxed at 20 percent, often for second jobs), 0T (no personal allowance), and K codes (where deductions exceed allowances, used for taxable benefits or unpaid tax from previous years).
UK employees typically lose 25 to 35 percent of gross pay to a combination of income tax, National Insurance, pension contributions, and student loan repayments. The exact figure depends on your salary band: basic rate (20 percent income tax, 8 percent NI) for income up to £50,270, higher rate (40 percent income tax, 2 percent NI) above that, and additional rate (45 percent) above £125,140. Pension contributions reduce taxable income but the money goes into your retirement pot rather than disappearing.
PAYE stands for Pay As You Earn and is the system HMRC uses to collect income tax from employees. Your employer calculates how much tax you owe each month based on your tax code and salary, then deducts it before paying you. PAYE means most UK employees do not need to file an annual tax return, because their tax is collected automatically throughout the year. Self employed workers and high earners may still need to file Self Assessment.
You can check your tax code through the HMRC mobile app or your Personal Tax Account at gov.uk. Wrong tax codes are common, especially after starting a new job, having multiple jobs, or returning to work after a break. If your code is wrong, you may be paying too much (you can claim a refund) or too little (you will owe HMRC). Tax codes typically update automatically each April, but always verify after major changes like a pay rise, a new job, or starting a pension.
Gross pay is your total earnings before any deductions, the headline number on your job offer or contract. Net pay (also called take home pay) is what actually lands in your bank account after income tax, National Insurance, pension, and any student loan repayments are deducted. For most UK employees, net pay is roughly 65 to 75 percent of gross pay, depending on salary band and pension contributions.