Why Your Payslip Might Be Wrong

The tax code is the single most common cause of an unexpected payslip. A single incorrect digit or letter can mean you pay hundreds of pounds too much or too little tax every month. For the 2026–27 tax year, the standard personal allowance is £12,570, giving the default code 1257L. If your code shows a lower number — say 1000L — HMRC is telling payroll your allowance is only £10,000. The lost £2,570 of allowance costs roughly £43 per month in extra tax at the basic rate, or £86 per month if you are a higher-rate taxpayer.

Letters matter just as much as numbers. The letter L means you get the standard personal allowance. The letter BR means basic-rate tax on every pound with no allowance at all — often used for a second job; check with HMRC if you expected an allowance here. The letter D0 means 40% on everything. The letter NT means no tax at all. Any of these on the wrong job produces a dramatically different net pay.

Common wrong-code scenarios include:

• Previous employer submitted incorrect leaving information to HMRC.
• You have recently changed jobs and the new employer is using a temporary code.
• HMRC has adjusted the code for an underpayment from a prior year being collected over 12 months.
• A benefit in kind (company car, private medical insurance) has been added to the code, reducing the effective allowance.

Always read the tax code on every payslip. If it changes from one month to the next, find out why before assuming it is correct.

W1, M1 or X indicates that PAYE uses the current period without looking back at earlier pay and tax; some software shows NONCUM. GOV.UK describes X for varying pay dates. 1257L M1 gives one month's allowance, not a full year's allowance.

That basis can overcollect or undercollect compared with the complete annual position, or give a similar result at steady pay. Give payroll a P45 or accurate starter checklist. For a new job, follow up with HMRC if the code remains wrong after 35 days. See the emergency-tax examples and correction routes.

When you leave a job your employer must give you a P45 — a four-part form showing your pay and tax to date in the current tax year. If you start a new job without handing over a P45, your new employer has no way of knowing how much tax you have already paid. Their payroll software will typically default to the emergency code 1257L M1 or, in some cases, the even harsher BR code (basic rate on everything).

The BR code is designed for second jobs where you have already used your personal allowance elsewhere. It can also reflect other income or a temporary starter setup. Being your main job does not by itself prove BR is wrong; check where HMRC has allocated your allowance. At a gross salary of £30,000 per year, BR produces a monthly tax bill of roughly £500 compared with around £290 under 1257L if you qualify for the full standard allowance — a difference of £210 per month.

To fix this quickly:

• Track down your P45 from your previous employer (it should be provided at or shortly after your last day).
• Give it to the payroll team at your new employer as soon as possible.
• If the P45 cannot be found, ask your new employer for a new starter declaration (formerly known as a P46) and complete it honestly. This tells HMRC whether this is your only job.
• Log in to your HMRC Personal Tax Account at tax.service.gov.uk to check what tax code HMRC currently holds for your new employment.

Any overpaid tax due to a missing P45 is usually refunded automatically through later payslips once the correct cumulative code is applied.

Student loan repayments are collected through PAYE alongside income tax and NI. HMRC notifies your employer which plan applies to you, and deductions start automatically — often without advance warning on your payslip.

The repayment thresholds and rates for 2026–27 are:

Repayments are calculated on earnings above the threshold. On a Plan 2 loan at a salary of £35,000, the annualised monthly calculation is 9% of (£35,000 − £29,385) ÷ 12 = £42.1125. Payroll rounds the deduction down to a whole pound, giving £42 for steady monthly pay. If you have both an undergraduate and a postgraduate loan, both deductions can appear on the same payslip.

If a deduction appears unexpectedly, check which plan applies to your loan by logging in to the Student Loans Company portal or your HMRC Personal Tax Account. Ask payroll to check the plan and notice it used. Employers must follow the applicable starter, start-notice and stop-notice rules; contact the Student Loans Company if your repayment status is wrong.

Employers assess eligible workers for automatic enrolment, normally from age 22 to State Pension age and above £10,000 annual earnings. For a usual qualifying-earnings scheme, total minimum funding is 8%, including at least 3% from the employer.

At £30,000 in 2026/27, qualifying earnings are £23,760. A 5% gross member contribution is £1,188 a year, or £99 monthly equivalent. Under relief at source the cash deduction is normally £79.20 and the provider adds £19.80. Under net pay, £99 is deducted before Income Tax. Salary sacrifice changes contractual salary and employer funding instead.

A valid opt-out within the statutory one-month window normally refunds contributions; later cessation and re-enrolment follow scheme and statutory rules. See workplace pensions.

Salary sacrifice is an arrangement where you give up a portion of your contractual salary in exchange for a non-cash benefit provided by your employer. The key effect is that your gross pay for tax and NI purposes is reduced before those deductions are calculated, so you save both income tax and employee NI on the sacrificed amount.

Common salary sacrifice schemes include:

• Electric vehicle (EV) schemes — you sacrifice salary for a lease car. For a zero-emission car in 2026–27, the annual taxable benefit is generally 4% of its P11D value; Income Tax is then charged on that benefit at your applicable rate.
• Cycle-to-work — bike and safety equipment via salary sacrifice; higher-value packages depend on employer approval and appropriate consumer-credit arrangements; £1,000 is not a universal tax-exemption cap.
• Additional pension contributions — sacrificing salary into pension saves NI as well as income tax.
• Holiday purchase — some employers allow you to buy extra leave via sacrifice.
• Childcare (legacy schemes) — new sign-ups closed in October 2018, but existing members may still see deductions.

A new scheme may appear as a named line or as reduced gross cash pay. This reduces the gross pay figure used for tax and NI calculations, so PAYE and NI can fall, although taxable benefits and other adjustments may offset some of the saving — but the sacrifice amount is taken out first. If you did not expect the scheme to start this month, check with your HR team when the deductions were due to begin.

Net pay can look wrong not because of a tax or deduction error, but simply because of when payments fall within a pay period. Several timing effects regularly catch people out:

• Joining mid-month: your first payslip covers only the days you actually worked. A salary of £36,000 yields £3,000 per full month, but if you started on the 15th you might receive only £1,500 — or a slightly different figure depending on whether your employer uses a calendar-day or working-day proration method.
• Back pay: if a pay rise was agreed late, the arrears for previous months may be paid as a lump sum in the current period. This pushes the gross figure up in one month, which can temporarily push you into a higher tax bracket on a non-cumulative code.
• Commission or bonus paid in arrears: sales commission earned in March may not be processed until April, landing in a new tax year and using a fresh set of tax bands.
• Overtime in the next period: overtime worked in the last few days of a month may fall into next month's payroll cut-off, meaning it appears a month later than expected.

If the gross on your payslip is different from what you expected, clarify the payroll cut-off dates with your employer before concluding there is a tax error. Many apparent discrepancies dissolve once timing is accounted for.

Bonuses and one-off payments are treated differently depending on whether your tax code operates on a cumulative or non-cumulative (W1/M1) basis.

Under a cumulative code, payroll calculates PAYE on taxable pay so far in the tax year, using the allowances and bands available up to that pay period and taking account of tax already deducted. A £5,000 bonus in month 9 is included in full when paid; the tax is not scheduled across the remaining months. Later cumulative calculations may adjust the overall position. See HMRC’s explanation of cumulative and non-cumulative codes.

Under a non-cumulative code (W1/M1), the payroll system has no memory of previous months. The bonus is simply added to this month's pay and taxed entirely at this month's rates. A £5,000 bonus on top of a £3,000 monthly salary pushes that month's gross to £8,000, which may tip you into the 40% band for that period alone. This produces a very large tax deduction in one month even though your annual earnings would not normally attract higher-rate tax.

A large irregular payment on a non-cumulative code can mean too much tax is collected, but a refund depends on your overall position and HMRC having the necessary income details. A later cumulative code may correct an overpayment through payroll. After the year ends, follow any tax calculation HMRC sends rather than assuming every M1/W1 code generates a refund.

Statutory payments replace your normal pay during periods of sickness or maternity leave, and their amounts are set by law rather than by your contract. If you receive statutory pay in a month where you expected your normal salary, the gross figure — and therefore all deductions — will look different.

Statutory Sick Pay (SSP) is paid from the first qualifying day of sickness. From 6 April 2026 it is the lower of £123.25 per week or 80% of average weekly earnings, for up to 28 weeks. The lower earnings limit and waiting days have been removed. SSP is subject to income tax and NI in the same way as normal pay. If your contractual sick pay is higher than SSP, your employer will pay the difference; if not, SSP is all you receive.

Statutory Maternity Pay (SMP) is paid for up to 39 weeks:

• First 6 weeks: 90% of your average weekly earnings with no cap.
• Remaining 33 weeks: the lower of £194.32 per week or 90% of your average weekly earnings.

Both figures are gross amounts — income tax and NI are still deducted. During paid maternity leave, employee pension contributions normally follow actual pay while employer contributions generally continue on the usual pre-leave basis; check the scheme and salary-sacrifice arrangements. The lower gross during SMP reduces your NI liability significantly, since NI has no cumulative mechanism and is simply applied to each pay period's earnings independently.

An attachment of earnings order (AEO) is a court instruction requiring your employer to deduct a fixed amount from your pay and forward it directly to the court or a creditor. Common examples include county court judgements, council tax arrears, child maintenance orders, and fines. Your employer is legally required to comply — they cannot ignore or negotiate the order on your behalf.

The deduction appears as a separate labelled line on your payslip, typically something like Attachment of Earnings or Court Order. Most orders specify a protected earnings rate — a floor below which your net pay cannot fall. If deducting the full order amount would take your net pay below the protected rate, the employer deducts a smaller amount that month and carries forward the shortfall.

Attachment orders are taken after tax, NI, and pension, so they do not reduce your taxable pay. They do, however, directly reduce your net pay.

If an AEO appears that you did not expect, contact the court reference on the order to check the underlying debt. Errors in court orders do occur — for example, an order intended for a previous occupant at your address, or a debt you believe has already been settled. In those cases you will need to apply to the court to have the order varied or discharged; your employer cannot intervene.

1. Match cash gross pay to your salary, hours and payroll cut-off.
2. Identify salary sacrifice and the pension method. Do not subtract a sacrifice twice if gross pay is already reduced.
3. Check taxable pay and NI-able pay separately. Payrolled benefits can increase taxable pay without adding cash; pension methods affect the two bases differently.
4. Read the full tax code, including country and non-cumulative markers.
5. Compare PAYE using the relevant period and any year-to-date adjustments.
6. Check NI category and pay frequency; directors can have annual NI rules.
7. Check loans and other cash deductions, including payroll rounding.
8. Reconcile cash earnings plus cash additions such as reimbursements, less cash deductions, to the amount paid. Taxable pay alone is not a universal starting point for net cash.
9. Compare year-to-date figures, allowing for a new tax year or employment record.

The checker provides an estimate from your inputs. Agreement cannot establish tax-code entitlement, every payroll adjustment or employer compliance. Ask payroll for the reconciliation when a difference remains.

Employees and workers generally have a right to an itemised payslip on or before payday. There are exceptions, including some armed-forces, police and seafaring roles; see GOV.UK's payslip guidance.

Payslips must show earnings before and after deductions and variable deductions. Fixed deductions may be explained separately as allowed by the rules. Hours must be shown where pay varies by time worked.

Raise unexplained pay or deductions with payroll in writing and keep your payslips, contract and hours records. If unresolved, contact ACAS for Great Britain, or the Labour Relations Agency in Northern Ireland. Tribunal procedures, remedies and time limits depend on the claim and jurisdiction; seek guidance promptly.