UK Payslip Glossary

Every term you might see on a UK payslip, explained in plain English. Updated for the 2026/27 tax year.

A

Auto-Enrolment: A legal requirement for employers to automatically enrol eligible workers into a workplace pension scheme and make minimum contributions. Employees can opt out but will be re-enrolled every three years. Read the full guide
Additional Rate: The 45% income tax rate applied to taxable income above £125,140 in England, Wales, and Northern Ireland for the 2026/27 tax year.
Attachment of Earnings: A court order requiring your employer to deduct money from your pay to repay a debt, such as council tax arrears, child maintenance, or a county court judgment.
Apprenticeship Levy: A 0.5% levy paid by employers with an annual pay bill exceeding £3 million. It funds apprenticeship training and does not appear as a deduction on employee payslips.
Arrears: Back-pay owed to you from a previous period, such as a pay rise applied retrospectively. Arrears are taxable in the period they are paid.
Agency Worker: A worker supplied by a recruitment agency to a client. Agency workers may be paid by the agency or an umbrella company, and are entitled to equal treatment after 12 weeks in the same role. Read the full guide

B

Basic Rate: The standard rate of income tax in England, Wales, and Northern Ireland, currently 20%. It applies to taxable income between £12,571 and £50,270 for the 2026/27 tax year.
Benefits in Kind (BIK): Non-cash benefits provided by your employer that are subject to tax, such as a company car, private medical insurance, gym membership, or interest-free loans above £10,000.
Bonus: A one-off or periodic additional payment from your employer, fully subject to income tax and NI. Bonuses are taxed in the pay period they are received, which can temporarily push you into a higher tax band. Read the full guide
Blind Person's Allowance: An additional tax-free allowance of £3,070 (2026/27) available to individuals registered as severely sight impaired. It is added to your personal allowance and reflected in your tax code.

C

Cumulative Tax: The standard method of calculating tax where your year-to-date earnings and allowances are considered. This ensures you pay the correct total tax across the year, even if your pay varies month to month.
Company Car Tax: A tax charge on the benefit of having a company car available for private use. The taxable amount is calculated as a percentage of the car's list price, based on its CO2 emissions.
Commission: A payment based on sales performance or targets achieved. Commission is treated as earnings for tax and NI purposes and is taxed in the pay period it is received.
Child Maintenance Deduction: A deduction from your pay ordered by the Child Maintenance Service (CMS) to fund child support payments. The amount depends on your income and number of children.
Childcare Vouchers: A salary sacrifice scheme (closed to new entrants since October 2018) where employees exchange gross salary for childcare vouchers, saving tax and NI. Existing members can continue.
Cycle to Work Scheme: A salary sacrifice arrangement allowing employees to hire a bicycle and safety equipment tax-free. The cost is deducted from gross pay over 12-18 months, saving income tax and NI.

D

Deductions: Any amounts subtracted from your gross pay. Statutory deductions include income tax and NI. Voluntary deductions include pension contributions, student loans, union fees, and salary sacrifice schemes.

E

Emergency Tax: A temporary tax calculation applied when HMRC does not have enough information to issue a correct tax code. It often results in higher deductions. Common when starting a new job without a P45. Read the full guide
Employee Number / Payroll Number: A unique identifier assigned to you by your employer for payroll purposes. It appears on your payslip and is used to track your pay records internally.
Employer NI: National Insurance contributions paid by your employer on top of your salary. The employer rate is 13.8% on earnings above the Secondary Threshold (£5,000 for 2026/27). This does not reduce your take-home pay.
Employer Payment Summary (EPS): A report sent by employers to HMRC to claim reductions on what they owe (e.g., statutory pay recoveries, apprenticeship levy). Submitted monthly.

F

Flat Rate Expenses: A fixed tax-free allowance agreed by HMRC for certain occupations to cover the cost of maintaining work uniforms or tools. The amount varies by industry and is reflected in your tax code.
Full Payment Submission (FPS): A report sent by employers to HMRC under RTI each pay day, containing details of payments and deductions for each employee.

G

Gross Pay: The total amount of money earned before any deductions such as income tax, National Insurance, or pension contributions are applied. Gross pay includes your basic salary plus any overtime, bonuses, commission, or other taxable payments. Read the full guide

H

Higher Rate: The 40% income tax rate applied to taxable income between £50,271 and £125,140 in England, Wales, and Northern Ireland for the 2026/27 tax year.
Holiday Pay: Pay received during annual leave. UK employees are entitled to a minimum of 5.6 weeks paid holiday per year. Holiday pay should be at your normal rate of pay.

I

IR35: Tax legislation designed to identify contractors who work like employees but operate through a limited company. If IR35 applies, the contractor pays similar tax and NI to an employee.

K

K Code: A tax code starting with K, meaning your untaxed income (benefits, state pension) exceeds your personal allowance. The number after K is multiplied by 10 to give the amount added to your taxable pay.

L

Lieu Days / TOIL: Time Off In Lieu — additional time off given instead of overtime pay. If you work extra hours, your employer may offer equivalent time off rather than additional payment.

M

Marriage Allowance: A tax benefit allowing a non-taxpayer or low earner to transfer 10% of their personal allowance (£1,260) to their spouse or civil partner, saving up to £252 per year.

N

Net Pay: The amount of money you actually receive in your bank account after all statutory and voluntary deductions have been subtracted from your gross pay. Also referred to as "take-home pay". Read the full guide
National Insurance (NI): A mandatory contribution deducted from your earnings that funds state benefits including the State Pension, NHS, and unemployment support. Both employees and employers pay NI contributions. Read the full guide
NI Category Letter: A letter on your payslip (most commonly A) that determines the rate of National Insurance contributions you and your employer pay. Different letters apply based on age, employment type, and other factors. Read the full guide
Non-Cumulative Tax (Week 1/Month 1): A method where each pay period is treated independently, ignoring previous earnings and tax paid. Used as an emergency measure. Identified by W1, M1, or X suffix on your tax code. Read the full guide
NI Number (NINO): Your National Insurance number (format: AB 12 34 56 C) is a unique identifier used by HMRC and DWP to track your NI contributions and tax records throughout your working life.
Notice Pay: Pay received during your notice period (or payment in lieu of notice). It is fully taxable and subject to NI contributions as normal earnings.
National Minimum Wage (NMW): The legal minimum hourly rate employers must pay workers. Rates vary by age: 21+ (£12.21), 18-20 (£10.00), Under 18 (£7.49), Apprentice (£7.49) for 2026/27.
National Living Wage (NLW): The minimum hourly rate for workers aged 21 and over, currently £12.21 per hour for 2026/27. This is a legal requirement, distinct from the voluntary Real Living Wage.

O

Overtime: Hours worked beyond your contracted hours, typically paid at a higher rate (e.g., time-and-a-half or double time). Overtime is fully taxable and subject to NI contributions. Read the full guide

P

PAYE (Pay As You Earn): The system used by HMRC to collect income tax and National Insurance from employees. Your employer deducts these amounts from your pay before you receive it and sends them directly to HMRC on your behalf. Read the full guide
Personal Allowance: The amount of income you can earn each tax year before you start paying income tax. For the 2026/27 tax year, the standard personal allowance is £12,570. Read the full guide
P45: A form issued by your employer when you leave a job. It shows your total pay and tax deducted in the current tax year. You give parts of it to your new employer so they can apply the correct tax code. Read the full guide
P60: An annual summary issued by your employer after the end of each tax year (by 31 May). It shows your total pay and deductions for the year and is used for self-assessment tax returns and benefit claims. Read the full guide
P11D: A form submitted by employers to HMRC listing the value of benefits in kind and expenses provided to employees. Common items include company cars, private medical insurance, and interest-free loans.
Pension Contribution: Money deducted from your pay and invested into a workplace pension scheme. Under auto-enrolment, the minimum employee contribution is 5% of qualifying earnings (between £6,240 and £50,270). Read the full guide
Pay Period: The time span covered by a single payslip. Common periods are weekly (52 per year), fortnightly (26), four-weekly (13), or monthly (12).

Q

Qualifying Earnings: The band of earnings used to calculate minimum pension contributions under auto-enrolment. For 2026/27, this is earnings between £6,240 and £50,270 per year.

R

Redundancy Pay: A payment made when your job is eliminated. The first £30,000 of statutory redundancy pay is tax-free. Any amount above £30,000 is subject to income tax (but not NI).
Real Time Information (RTI): The system by which employers report payroll information to HMRC each time they pay employees, rather than at the end of the year. This enables HMRC to maintain up-to-date records.

S

Salary Sacrifice: An arrangement where you agree to reduce your gross salary in exchange for a non-cash benefit, such as increased pension contributions or a cycle-to-work scheme. This reduces your taxable income and NI liability. Read the full guide
Student Loan Deduction: A repayment deducted from your salary when you earn above the repayment threshold for your student loan plan. The rate and threshold depend on your plan type (Plan 1, 2, 4, 5, or Postgraduate). Read the full guide
Statutory Sick Pay (SSP): A payment made by your employer when you are off work due to illness for four or more consecutive days. The current rate is £118.75 per week (2026/27) and is paid for up to 28 weeks.
Statutory Maternity Pay (SMP): A payment made to eligible employees during maternity leave. It is paid for up to 39 weeks: 90% of average weekly earnings for the first 6 weeks, then £187.18 per week (or 90% if lower) for the remaining 33 weeks.
Statutory Paternity Pay (SPP): A payment made to eligible employees during paternity leave. Paid at £187.18 per week (or 90% of average weekly earnings if lower) for up to 2 weeks in the 2026/27 tax year.
Statutory Adoption Pay (SAP): A payment made to eligible employees who adopt a child. The structure mirrors SMP: 90% of average weekly earnings for 6 weeks, then £187.18 per week for 33 weeks.
Shared Parental Pay (ShPP): A payment available to eligible parents who choose to share leave after the birth or adoption of a child. Paid at £187.18 per week (or 90% of average weekly earnings if lower) for up to 37 weeks.
Scottish Income Tax: A separate income tax regime for Scottish taxpayers with five bands: starter (19%), basic (20%), intermediate (21%), higher (42%), and top (47%). Identified by an S prefix on your tax code. Read the full guide
Self-Assessment: A system for reporting income to HMRC that is not taxed at source, such as self-employment income, rental income, or capital gains. The deadline is 31 January following the end of the tax year.

T

Tax Code: A code issued by HMRC that tells your employer how much tax-free income you are entitled to in a tax year. It is used to calculate the correct amount of income tax to deduct from your pay. The most common code is 1257L. Read the full guide
Tax-Free Allowance: The total amount of income you can receive before paying income tax. For most people this is the Personal Allowance (£12,570), but it can be adjusted by benefits, Marriage Allowance, or other factors reflected in your tax code.
Taxable Pay: The portion of your gross pay that is subject to income tax after your personal allowance and any other tax-free amounts have been deducted. This is the figure your income tax is calculated on.
Tax Period: A numbered period within the tax year used for PAYE calculations. Monthly-paid employees have tax periods 1-12 (April = 1, March = 12). Weekly-paid have periods 1-52.
Tax Refund: Money returned to you by HMRC when you have overpaid tax. This can happen if you were on the wrong tax code, had a period of unemployment, or your income dropped mid-year. Read the full guide

U

Umbrella Company: A company that acts as the employer for contractors and agency workers. The umbrella company invoices the agency, receives payment, and then pays the worker as an employee after deducting tax, NI, and fees. Read the full guide
Underpayment: When you have not paid enough tax during the year. HMRC will usually collect this by adjusting your tax code the following year, spreading the repayment across 12 months.

Y

YTD (Year to Date): The cumulative total of a particular figure (such as gross pay, tax paid, or NI contributions) from the start of the current tax year (6 April) up to the date of the payslip. Read the full guide

Z

Zero-Hours Contract: An employment contract with no guaranteed minimum hours. Workers are only paid for hours actually worked but retain employment rights including holiday pay and the national minimum wage.