5 things to look for in your first playslip
There’s nothing more exciting than getting your first payslip, other than getting your second payslip, and your third… and… well, you get the idea. However, amongst the excitement of being paid it’s easy to overlook some of the information the document has to offer.
So, here’s five key things you might want to look out for in your first payslip…
Payslip – Gross (& Net) pay
First up, and you could say most importantly, is Gross and Net pay. Technically this is two separate sections of your payslip, but both are equally important.
Your Gross pay is your full pay but before any deductions such as income tax or National Insurance have been taken off, while your Net pay is what you will see in your bank account.
Payslip – Income Tax
As the name suggests, income tax is a tax paid on the income you earn and is one of the two main deductions made before your Gross pay becomes your Net pay.
Usually you can earn a certain amount of income before you have to pay income tax, this is called your personal allowance. Currently you can earn up to £12,500 (aka your personal allowance) before income tax is taken off your salary; anything above that will be subject to tax. Also, depending where you live in the UK will also impact the income tax you pay because rules in Scotland are different to England, Northern Ireland and Wales.
Payslip – Tax code
One of the more confusing parts of your payslip is made up of a series of letters and numbers, but it’s another really important area to make sure is correct as it could result in you having more tax taken from your salary (or worse, not paying enough) if it’s incorrect. I’m referring to your tax code which will tell your employer how much tax they need to deduct. If you’re starting your first job soon it’s worth completing this handy starter checklist to give to your new employer before your first pay so they can make sure you’re on the correct tax code.
Payslip -National Insurance
National Insurance (NI) is the second main deduction that you’ll see on your payslip. Your NI payments will go towards building your entitlement to certain government benefits such as the State Pension.
My top tip is to memorize your NI number which you’ll be sent just before your 16th birthday. The number is with you for your whole life, it never changes, and you’ll need it at various points throughout your life, for example, when you’re applying for a job, if you’re applying for student loans, opening up an Individual Savings Account (ISA) and contacting the government.
Payslip – Pension contributions
Finally, another really important part of your payslip relates to payments made to a workplace pension scheme. All companies must have a pension scheme in place to help their employees build a pot of money that they can use later on in life.
If you’re automatically enrolled into your company’s pension scheme when you start working; each month a percentage of your salary will be invested into your pension pot. Usually your employer will also pay into your pot and depending how the pension is set-up there may be a further top-up from the government.
It’s best to check with your employer when you start working about how their pension scheme works.
Whether wages are weekly or monthly, check your payslip. Check your pay is correct and start to keep on top of your finances.
A blog post by Gregor Sked
Gregor has been working within the financial service industry since 2013. Most of his early career was spent at Standard Life where he was a presenter in the workplace pension team. He joined Royal London in 2018 to spend more time on financial protection. Gregor is involved in developing adviser facing content, presenting, writing articles and commenting for the press. Gregor is also studying towards a Diploma in Financial Planning through the CII.
For more on the above and other money subjects, check out our bitesize learning videos below on Moving from from school or the Your Money Matters here.