Do you find your payslip confusing? Cashfloat brings you your payslip explained with a breakdown of all the terms you need to know to understand your wages. Learn your rights about payslips, why payslips are important and understand your payslip properly!
It is very important to have your payslip explained properly. Some of the terms on your payslip may seem confusing at first, but it’s important for you to understand exactly where your money is going. This article will help you make sure that you recieve the right wages by giving you a clear understanding of all the terms on your payslip.
- Your right to a payslip
- Mandatory Payslip information
- Optional extra payslip information
- Payslip terms and their meanings
- Keeping your payslips
- Some information must be on your payslip
- Some companies give their employees a personal identification number
- Keep your payslips safe
Your Payslip Rights Explained
You have the right to know exactly how much money your employer is paying you. When you are employed full time by a company, unless you are an independent contractor or are working on a freelance basis, your employer must provide you with a payslip to explain exactly how much they pay you. The written, detailed payslip does not necessarily have to be on paper. Some employers may send an email or allow access through a website.
How to Read your Payslip
There is some information that must be on the payslip:
- Your payslip must show your gross pay. This is the amount of money that you have earned before any deductions. After deductions, the amount shown is your net pay. The net pay is the earnings you come home with every payday. It’s important to budget this money carefully so you can avoid even the best low interest loans.
- Variable deductions. These are deductions that change monthly, such as income tax and national insurance. The law requires employers to display the amount and category for these deductions.
- Your payslip must show fixed deductions, although these payslip deductions only need to be explained once a year. These are deductions that come out of your payslip every month and do not change, such as union fees.
- Your net pay, or amount of take-home money must be on the payslip.
- Any part payments, such as a cash payment must be on the payslip. In addition, it must include the method of how the company pays you (direct deposit, cheque, etc).
- Employers may or may not provide additional information
There is some other information that may be provided by your employer, that they are not obliged to provide on the payslip. These could be:
- Your tax code
- Your National Insurance Number
- The rate of pay (annually, hourly)
- Any additional payments that could include tips, bonuses or overtime. These are all included your gross pay figure, but some employers make it easier to understand by providing more detailed payslips .
So what have we learned so far?
Your Payslip Terms & Deductions Explained
|Personal information||Your name and address go here. It is important to check that the information is correct and update it if necessary.|
|Employee number||For payroll purposes only, some companies give their employees a personal identification number.|
|National Insurance Number (NI)||Every employee needs a National Insurance number to work in the UK. Your employer can deduct your NI contributions that will allow you to claim benefits like a pension.|
|Tax period||The tax year is from 6th April until 5th April the following year in the UK and the month that the payslip is for may be shown by a number, 1 for April, 2 for May, etc.|
|Tax code||A tax code allows your employer to know how much tax-free money you can earn a year. The letter in the code shows your situation to your employer.|
|Basic pay||Here is the total amount of money that you earned during the month. There may be additional information that was used to calculate this figure, such as the number of days that you worked during that particular month.|
|Additions||Back pay, overtime and any bonuses that are extra to your basic pay is in this box.|
|Gross pay||Your gross pay is a combination of your additions and your basic pay before any deductions. This shows exactly what you have earned during the month.|
|Deductions||Here you may see all the different things that are taken off from your pay. These will include income tax, NI contributions, pension contributions and student loan repayments.|
|Workplace benefits||Workplace benefits can include season ticket loans or cycle to work schemes. These are taken off your salary after the other deductions.|
|Net pay||Your net pay is the amount left from your gross pay after all of your deductions and any workplace benefits have been taken out. It is essential that you check that the amount that you receive into your bank account is the same as the amount on your payslip.|
It’s a good idea to keep your payslips
Payslips contain a lot of sensitive, personal information, so it is a good idea to keep them or safely dispose of them to avoid becoming a victim of identity theft. In the case of a discrepancy, it is a good idea to keep records of your earnings and the tax that you have paid so that any problems could be sorted out in a simple manner and you could check your personal details. When you are applying for a cash advance loan or another financial product, some payday lenders UK will ask to see your last 3 payslips as proof of earnings.
The Importance of Your Payslip: Explained
It is extremely important to be able to understand your payslip and understand where your money is going. Payroll staff can make mistakes and you could end up paying more of your salary that needs be. If you find a fault with your payslip or do not understand something that has appeared on it, you should not hesitate to contact your payroll department. You have the right to know exactly where your hard earned money is going. Knowing where your money is going will help you keep a budget that will make sure you can do with the best fast loans in the UK.