Understanding Your Payslip

A payslip summarises your earnings and deductions and is issued by your employer when you get paid.

1. Your personal information

Your name, and sometimes your home address, will be shown.

2. Your payroll number

Some companies use payroll numbers to identify individuals on the payroll.

3. Date

The date your pay should be credited to your bank account is usually shown.

4. Tax period

The number here represents the tax period for that payslip. For example, if you’re paid monthly, 01 = April and 12 = March.

5. Your tax code

Your tax code will be sent to you by HM Revenue & Customs (HMRC).

The code tells your employer how much tax-free pay you should get before deducting tax from the rest. If the code is wrong, you could end up paying too much or too little tax. So it’s important to check this against your latest tax code notice.

6. Your National Insurance number

You must have a National Insurance number to work in the UK.

You have the same NI number throughout your life – even if you change your name.

It’s your personal number for the entire social security system. It’s used to make sure all your contributions are recorded properly and helps to build up your entitlement to benefits – such as a pension.

7. Payments, wages, bonuses and commission

This will show how much you’ve earned before any deductions are made.

It could also show any extra payments you’ve earned on top of your basic pay, such as like bonuses, commission or overtime.

8. Expenses

Your employer might pay any expenses owed to you via the payroll.

Some employers will list each expense payment separately on the payslip. Others combine them to show a taxable or non-taxable amount.

9. Deductions – tax and National Insurance

Your payslip must show the amount of variable deductions, such as tax and National Insurance.

Any Pension contributions will also be shown.

10. Earnings Arrestment Order (EAO)                                                   

If you owe someone money (a creditor) and they want to use an earnings arrestment to make you pay your debt, they must send you a notice from a court called a 'charge for payment'.

An Earnings Arrestment Order (EAO) instructs an employer to deduct money straight from your wages.

The prescribed rates of deduction are

Net Earnings (Monthly)Deduction
Not exceeding £566.51Nil
Exceeding £566.51 but not exceeding £2,047.6519% of earnings exceeding £566,51
Exceeding £2,047.65 but not exceeding £3,078.47£281.42 plus 23% of earnings exceeding £2,047.65.
Exceeding £3,078.47£518.51 plus 50% of earnings exceeding £3,078.47.

Can Earnings Arrestment be stopped?

There are options available to help you manage your debt and avoid, challenge or ultimately stop an EAO.

You can:

  • negotiate a repayment plan with your creditors;
  • seek debt advice from a professional debt advisor; or
  • enter a debt solution.

Statutory debt solutions include a Debt Payment Programme under the Debt Arrangement Scheme (DAS), a Protected Trust Deed or Sequestration.

Full advantages and disadvantages of statutory debt solutions can be found here.