Worked example 1
Gross £1,850. Tax £160, NI £80, pension £74. Net pay?
- Total deductions: 160 + 80 + 74 = £314.
- Net: 1,850 − 314.
Answer: £1,536
Financial Literacy · Intermediate
How to read a payslip: gross pay, deductions and net pay
A payslip shows what you earned and what was taken off before the money reached your bank. Checking it catches mistakes in hours, tax or pension.
- 1Learn it
- 2See it worked
- 3Try it online
- 4Print it
- 5Check your answer
Before you start
Who it's for and what to know first
Adding and subtracting decimals.
Learn it
How it works
- Gross pay: total earned before deductions (hours × hourly rate, plus overtime or bonus).
- Deductions: Income Tax (PAYE), National Insurance (NI), workplace pension contributions, and sometimes student loan repayments.
- Net pay: gross pay minus all deductions — the ‘take-home’ amount.
- Tax code (such as 1257L) tells your employer how much tax-free allowance you have. A wrong code means wrong tax — contact HMRC if unsure.
- Year-to-date (YTD) figures total everything since the start of the tax year (6 April in the UK).
- Rates and thresholds change; figures in these examples are illustrative, not current tax advice.
Try it online · print it · check it
Practice questions
Tips
Common mistakes
- Budgeting with gross pay instead of net pay.
- Ignoring an emergency tax code on a first job.
Last reviewed: 25 September 2026