How do I read my payslip?

Most people look only at the amount that arrives. That misses the two things worth checking: whether the deductions are correct, and whether the gross pay includes everything it should. Both can be wrong for months before anyone notices.

What you'll need

• A recent payslip
• Your contract (optional)

Step by step

1. Check gross pay first.This is your total before deductions. Confirm it matches your contracted rate plus any overtime, bonus or allowances due this period.
2. Check your tax code or equivalent.A wrong code is the most common payroll error and can mean paying substantially too much or too little tax for months.
3. Check each deduction separately.Tax, social security or national insurance, pension, student loan, anything else. Each should be identifiable rather than an aggregate.
4. Check the pension contribution.Both yours and any employer contribution. Contributions occasionally stop after a change and it goes unnoticed for a long time.
5. Check the year-to-date figures.They accumulate errors. A discrepancy here that does not match your monthly figures indicates a problem earlier in the year.
6. Check hours and overtime if you are paid hourly.Compare against your own record. Missing overtime is common and nobody will notice it on your behalf.
7. Keep every payslip.Digitally at minimum. They are needed for mortgage applications, benefit claims, tax queries and disputes, sometimes years later.
8. Query anything unclear promptly and in writing.Payroll errors are much easier to correct in the same tax year. A query left for a year becomes a considerably bigger job.

Tips

• Check thoroughly after any change — a pay rise, a promotion, a new job, changed hours. Errors cluster around changes.
• If your tax code changes, you should normally receive a separate notice explaining why. If not, ask.
• Compare against last month's payslip rather than reading it cold. Differences stand out immediately that way.

Common mistakes

• Only looking at the net amount — Deduction errors and missing overtime are invisible in the final figure until they have run for months.
• Not checking after a change of circumstances — Pay rises, new starts and changed hours are exactly when payroll errors occur.
• Discarding payslips — They are needed for mortgage applications, benefit claims and any dispute, sometimes years later.

Questions people ask