Understanding Your Payslip: Difference between revisions
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'''3. Fixed deductions''' – these are the deductions which remain the same each month. An example of these are trade union subscriptions. If you have fixed deductions on your payslip and it is not stated what they are, your employer must provide you with a standing statement of fixed deductions. <br> | '''3. Fixed deductions''' – these are the deductions which remain the same each month. An example of these are trade union subscriptions. If you have fixed deductions on your payslip and it is not stated what they are, your employer must provide you with a standing statement of fixed deductions. <br> | ||
'''4. Net pay''' – this is the amount of money remaining after all deductions have been made, this is the amount that you will receive in your bank account on pay day. <br> | '''4. Net pay''' – this is the amount of money remaining after all deductions have been made, this is the amount that you will receive in your bank account on pay day. <br> | ||
'''5. The amount and method for any part payment of wage'''- For example, separate figures of a cash payment and the balance credited to a bank account. <br> | '''5. The amount and method for any part payment of wage''' - For example, separate figures of a cash payment and the balance credited to a bank account. <br> | ||
== Video guide to your payslip == | == Video guide to your payslip == | ||
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better: | better: | ||
''' | '''National Insurance (NI) or (NIN) number''': This is the UK’s social security system. Your NI number confirms that you’re eligible for work in the UK. You also have a National Insurance number to make sure your National Insurance contributions and tax are recorded against your name only. <br> | ||
''' | '''Payment method''': Most employers will pay your earnings directly into your bank account. This is done through a system called Banker’s Automated Clearing Services, or BACS for short – which is what you’ll normally see on your payslip. <br> | ||
''' | '''Payroll number''': Some companies use payroll numbers to identify individuals on their payroll. For Flashbay, this number will be displayed in the format: EM0000. <br> | ||
''' | '''Pensions''': If you’re paying towards a workplace pension that your company has set up or arranged access to, the amount you’re contributing will be shown on your payslip. <br> | ||
''' | ''' Student loan''': If you’re making student loan repayments, this will be shown on your payslip. This only applies to UK student loans. <br> | ||
''' | '''Tax code''': This indicates the rate you’re taxed at. To find out how much income you can earn in a financial year before you need to pay tax, simply add a zero to the number shown. For example, Tax code 1000L means you can earn £10,000 a financial year before paying any Income Tax. The most common letter is L, which means your tax rate is set at the standard rate. Tax codes are explained in further detail [https://www.gov.uk/tax-codes/what-your-tax-code-means here] , but If you have any further enquiries regarding your tax code, please contact HMRC.<br> | ||
''' | '''Tax period''': The number here represents the tax period for that payslip. For example, if you are paid monthly, this would translate as: 01 = April and 12 = March. This is also referred to as the financial year. <br> | ||
'''Year-to-date (YTD)''': This describes how much you’ve earned so far this financial year. Our financial year is from April 1st - March 31st. <br> | |||
== Useful Payroll Abbreviations == | == Useful Payroll Abbreviations == | ||
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'''BACS''' – Bankers Automated Clearing Services <br> | '''BACS''' – Bankers Automated Clearing Services <br> | ||
''A payment scheme that processes financial transactions electronically.'' <br> | ''A payment scheme that processes financial transactions electronically.'' <br> | ||
'''ET''' – Earnings Threshold <br> | '''ET''' – Earnings Threshold <br> | ||
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'''PILON''' – Payment in Lieu of Notice <br> | '''PILON''' – Payment in Lieu of Notice <br> | ||
''A compensation payment that covers the notice period of an employee who has been terminated/told not to work their notice.'' <br> | ''A compensation payment that covers the notice period of an employee who has been terminated/told not to work their notice.'' <br> | ||
'''SMP''' – Statutory Maternity Pay <br> | '''SMP''' – Statutory Maternity Pay <br> | ||
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'''SPP''' – Statutory Paternity Pay <br> | '''SPP''' – Statutory Paternity Pay <br> | ||
''An allowance of 2 weeks, given to male employees during the leave they take before and after having a child.'' <br> | ''An allowance of 2 weeks, given to male employees during the leave they take before and after having a child.'' <br> | ||
'''SS '''– Salary Sacrifice
<br> | |||
''A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit. Cycle to Work loan repayments would be an example of this.'' <br> | |||
'''SSP''' – Statutory Sick Pay <br> | '''SSP''' – Statutory Sick Pay <br> | ||
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'''TY''' – Tax Year <br> | '''TY''' – Tax Year <br> | ||
''The year in which tax is calculated, starting 6th April in the UK.''<br> | ''The year in which tax is calculated, starting 6th April in the UK.''<br> | ||
== Understanding Tax Codes == | |||
The amount of tax you pay depends on your total income and your Personal Allowance. <br> | |||
HMRC assigns each individual a tax code. Different people have different tax codes, depending on their circumstances. If the tax code you are assigned is incorrect, you could end up owing the government money, even if it’s not your fault. Checking that your tax code is correct should avoid you over or underpaying tax. <br> | |||
You can estimate how much tax you should pay on the government website [https://www.gov.uk/estimate-income-tax here]. You can also read more about Income Tax on the government website site here [https://www.gov.uk/income-tax here]. <br> | |||
Information on what the numbers and letter in your tax code mean can be found [https://www.gov.uk/tax-codes/what-your-tax-code-means here]. <br> | |||
Latest revision as of 15:04, 30 July 2021
Understanding your payslip
What information must be included on your payslip?
Your payslip includes a range of information depending on your role however there are five things it must always display.
1. Gross pay – this is your total earnings, before any deductions or taxes.
2. Variable deductions – this refers to the deductions that could change each payday, and will show the amount that’s being deducted. It includes tax and National Insurance.
3. Fixed deductions – these are the deductions which remain the same each month. An example of these are trade union subscriptions. If you have fixed deductions on your payslip and it is not stated what they are, your employer must provide you with a standing statement of fixed deductions.
4. Net pay – this is the amount of money remaining after all deductions have been made, this is the amount that you will receive in your bank account on pay day.
5. The amount and method for any part payment of wage - For example, separate figures of a cash payment and the balance credited to a bank account.
Video guide to your payslip
Please watch the video below to see where you can find the information on your Flashbay payslip.
Useful Payslip Definitions
Payslips can seem confusing, with lots of jargon that you may not be familiar with. The information included in your payslip will vary depending on your individual earnings, benefits, and deductions. Below are definitions for commonly queried payroll terms to help you understand your payslip better:
National Insurance (NI) or (NIN) number: This is the UK’s social security system. Your NI number confirms that you’re eligible for work in the UK. You also have a National Insurance number to make sure your National Insurance contributions and tax are recorded against your name only.
Payment method: Most employers will pay your earnings directly into your bank account. This is done through a system called Banker’s Automated Clearing Services, or BACS for short – which is what you’ll normally see on your payslip.
Payroll number: Some companies use payroll numbers to identify individuals on their payroll. For Flashbay, this number will be displayed in the format: EM0000.
Pensions: If you’re paying towards a workplace pension that your company has set up or arranged access to, the amount you’re contributing will be shown on your payslip.
Student loan: If you’re making student loan repayments, this will be shown on your payslip. This only applies to UK student loans.
Tax code: This indicates the rate you’re taxed at. To find out how much income you can earn in a financial year before you need to pay tax, simply add a zero to the number shown. For example, Tax code 1000L means you can earn £10,000 a financial year before paying any Income Tax. The most common letter is L, which means your tax rate is set at the standard rate. Tax codes are explained in further detail here , but If you have any further enquiries regarding your tax code, please contact HMRC.
Tax period: The number here represents the tax period for that payslip. For example, if you are paid monthly, this would translate as: 01 = April and 12 = March. This is also referred to as the financial year.
Year-to-date (YTD): This describes how much you’ve earned so far this financial year. Our financial year is from April 1st - March 31st.
Useful Payroll Abbreviations
BACS – Bankers Automated Clearing Services
A payment scheme that processes financial transactions electronically.
ET – Earnings Threshold
The amount you can earn before being required to pay tax.
HMRC – Her Majesty’s Revenue and Customs
The department of government responsible for tax collection.
LEL – Lower Earnings Limit
The amount you can earn before being required to pay National Insurance.
NIC – National Insurance Contributions
A sum deducted from your salary, in addition to tax.
PAYE – Pay As You Earn
A tax deduction taken from HMRC.
PILON – Payment in Lieu of Notice
A compensation payment that covers the notice period of an employee who has been terminated/told not to work their notice.
SMP – Statutory Maternity Pay
An allowance of 39 weeks, given to female employees during the leave they take before and after having a child.
SPP – Statutory Paternity Pay
An allowance of 2 weeks, given to male employees during the leave they take before and after having a child.
SS – Salary Sacrifice
A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, usually in return for a non-cash benefit. Cycle to Work loan repayments would be an example of this.
SSP – Statutory Sick Pay
Pay given to employees who have been absent from work due to illness.
TY – Tax Year
The year in which tax is calculated, starting 6th April in the UK.
Understanding Tax Codes
The amount of tax you pay depends on your total income and your Personal Allowance.
HMRC assigns each individual a tax code. Different people have different tax codes, depending on their circumstances. If the tax code you are assigned is incorrect, you could end up owing the government money, even if it’s not your fault. Checking that your tax code is correct should avoid you over or underpaying tax.
You can estimate how much tax you should pay on the government website here. You can also read more about Income Tax on the government website site here here.
Information on what the numbers and letter in your tax code mean can be found here.
