Understanding your payslip, tax & National Insurance
What all those numbers on your first payslip actually mean.
Gross vs net pay
“Gross pay” is what you earn before anything is taken off. “Net pay” (or “take-home”) is what actually lands in your bank after deductions.
The gap between them is mostly tax and National Insurance.
Income tax & your Personal Allowance
Everyone can earn a certain amount each year tax-free — the “Personal Allowance”. You only pay income tax on earnings above it.
Most people start on a standard tax code. If you think you've paid too much tax (common in a first job), you can check and reclaim it from HMRC.
National Insurance
National Insurance (NI) is a separate deduction that counts towards things like your future State Pension.
You start paying NI once your earnings pass a weekly threshold.
Check your payslip
Always check your hours and pay rate are right. Mistakes happen — and you're allowed to ask your employer to explain anything.
Keep your payslips. You'll need them for things like proving income for a tenancy or a loan.
Key points
- Net pay is what you take home after tax + NI.
- You get a tax-free Personal Allowance each year.
- You can reclaim overpaid tax from HMRC.
- Always check your hours and keep your payslips.
This is a free WorkPathway lesson to build your skills — it's not a regulated or accredited qualification.