Many of us are guilty of not checking our payslips, research by QuickBooks showed that 25% of the UK public don’t check them at all. Often, we will simply see that our wage has gone into our bank and not think about it again until the following payday, discarding our unopened payslips in the process. However, it’s important that we check our payslips more often than we currently do.
A big reason why we may not take much notice of our payslips could simply be because we don’t fully understand each element of them. Luckily, QuickBooks have created an interactive payslip which highlights all aspects of a standard UK payslip, detailing what each one means. It’s important to understand your payslip as it can help you better plan your personal finances.
How Often Should I Check My Payslip?
You should at least have a glance at your payslip every payday to ensure you’re being paid correctly, but there are other key times and situations when you should thoroughly check them:
- At the start of each tax year (April) to ensure your tax code is correct.
- If you’re receiving any form of statutory pay, such as sick pay or maternity pay.
- Any changes within your financial circumstances (e.g., pay rises or commissions.)
- If your pay varies each payday (e.g., if you are doing paid overtime.)
Do I Need To Keep My Payslips?
You’re not obligated to keep payslips, however, it is a good idea to do so.
If you encounter any issues or mistakes with your payslip, having old ones to hand can make the issue easier to identify. Also, payslips are often required by the bank when investing in certain products or services, such as getting a mortgage or a loan.
Payroll providers have to keep copies of employees’ payslips dating back three years. They are also obligated to keep P60s for at least 22 months after the end of a tax year. If you happen to misplace any of these, your employer can provide them for you if still within the time period.
What Do I Do If I Spot An Issue With My Payslip?
What you do about an issue on your payslip completely depends on what the issue is.
If the issue is to do with the amount that you have been paid, you should go directly to your manager or HR department. However, if the issue is to do with any statutory parts of your payslip, such as your National Insurance, student loan repayments, or tax codes, you should go directly to HMRC – your employer can’t help with this and are unable to contact HMRC on your behalf.
Be sure to address any payslip issues straight away so they can be resolved quickly and any further complications can be avoided.
What Is A Tax Code?
You will notice that your payslip has a tax code – this is a series of numbers and letters that shows how much tax-free pay you’re entitled to. For example, the most common tax code tends to be 1257L – this means that you’re earning £12,750 before tax, which applies to most people who have one job.
Tax codes can look different for several reasons, such as if you have multiple jobs, or claim marriage allowance, in which case you will see an M or N suffix.
What Is An Emergency Tax Code?
Emergency tax codes are often used by your employers if your tax code isn’t available, which usually happens when you start a new job or were formerly self-employed.
When you have an emergency tax code, it will be assumed that you’re entitled to the basic allowance of £12,750, but you’ll pay tax on all income above the basic allowance – this isn’t cumulative, it’s on a weekly or monthly basis. This means that if you’re entitled to any other relief or allowance, you might not receive this until the correct tax code is given to you by the tax office.
Emergency tax codes could look like any of the following:
- 1257 W1
- 1257 M1
- 1257 X
If you have an emergency tax code HMRC should automatically rectify the issue and automatically update your payments.
