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Your first payslip, decoded
The gap between the salary you were offered and the money that lands in your account surprises almost everyone. Set your salary and see exactly where every pound goes, and why.
Repaying a student loan? (Plan 5)
Your pension contribution
Monthly take-home
£1,857
£22,290 a year, 80% of your gross salary
Where each £1 of salary goes (per month)
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Your first payslip, decoded
- Gross pay£2,333/mo
Your salary before anything is taken. Everything below comes off this.
- Income tax (PAYE)£234/mo
The first £12,570 you earn each year is tax-free (your personal allowance). Then 20% up to £50,270, and 40% up to £125,140. Your employer collects it before you're paid.
- National Insurance£103/mo
8% of everything between £12,570 and £50,270, then 2% above that. It builds your entitlement to the State Pension and some benefits.
- Student loan (Plan 5)£23/mo
9% of everything you earn above £25,000. It only appears once you cross the threshold, and it's collected like a tax, not chased like a debt.
- Workplace pension (5%)£117/mo
Auto-enrolment means you're opted in by default. Your employer must add at least 3% on top, and your contribution usually gets tax relief. It's the closest thing to free money on the payslip.
Check your tax code
Illustration only, not financial advice. Uses 2026/27 rUK rates, a standard 1257L tax code and pension taken before income tax. Scottish tax bands differ.
What this means
The number in your job offer is your gross salary; the one that hits your bank account is your net pay. In between sit up to four deductions your employer handles automatically through PAYE (Pay As You Earn): income tax, National Insurance, student loan repayments and your workplace pension. You never see the money, which is exactly why it’s worth understanding once. After that, checking each payslip takes thirty seconds.
The UK tax system is marginal, which trips a lot of people up. Moving into the 40% band doesn’t mean all your pay is taxed at 40%, only the slice above £50,270. Your first £12,570 is always tax-free, the next slice is taxed at 20%, and so on. A pay rise never leaves you worse off through income tax alone.
The deduction to be most careful about cutting is the pension. Opting out of auto-enrolment saves a few pounds a week now, but it also refuses your employer’s contribution (a genuine pay cut) and gives up decades of compound growth. If money is tight, almost every other line of a budget is a better place to look first.
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