Whether you have just bagged your first job or you have made a change in career path, getting your paycheck can be a bit confusing. It is really important to make sure you’ve been paid correctly each month, but it can be quite overwhelming figuring out what everything means or where your money has gone. So, we have broken down the main terms to help your understanding:

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Annual salary:

This is your yearly salary total. 

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Pay Point:

You may see this on your paycheck if your salary is based on a pay scale, this is the point of the pay scale that you are on which equates to an annual salary. 

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Basic Pay:

This is your monthly salary amount before any added extras or deductions. So this should be your annual salary divided by twelve (if you are paid monthly). 

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Net Pay:

This is your take-home pay - the total you have earnt after all deductions, so this is the most important number to look out for on your paycheck.  

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Hours and Rate:

These are the number of hours you have worked and your hourly rate. This is especially important if you work a varying number of hours each month as you need to ensure the hours are correct. This also stands if you do any paid overtime - always check you have been paid for the correct amount of hours. 

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Tax (PAYE):

This is your income tax deduction which goes towards public funding such as  the NHS, education and roads. The amount you pay varies on which tax bracket you fall into. The Personal Allowance is £12,570 which is the amount you do not pay tax on, everything above that you pay 20% up to £50,270. This amount then increases to 40%, until £150,000 where it increases again to 45%. 

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National Insurance:

This is another mandatory deduction that can help to build your entitlement towards certain benefits including State Pension and Maternity Allowance. 

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Student Loans:

This shows how much of your student loans you have paid back this month which again, depends on how much you earn. All allowances and rates for these deductions can be found on the Gov website if you need to find out more information. 

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Pension Contributions:

This amount is how much you have contributed to your pension for that month. 

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Tax Code:

This code tells your employer how much income tax you are required to pay. 1257L is the most common code currently for those with one job or pension. 

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Tax period:

Each financial year runs from the 6th of April one year to the 5th of April the next. The year is split up into tax periods, so this number is stating which period your pay day fits into each month. 

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‍Year to date:‍

This means the period of time since the financial or calendar year started (usually the financial year). So you may see how much you have been paid and how much tax you have paid so far this year.