Every employee needs to have a strong understanding of their payslip and exactly what it means. This contains a lot of important information beyond your net pay, especially relating to deductions such as tax and anything else that is taken out of your pay. So, read on for all that you need to know and what you should do if you ever have any issues or questions.
Information on the payslip
Your payslip will contain a range of important information. This includes your name and home address, your payroll number used to identify you, the date that payment will be credited, the tax period and your tax code and your National Insurance(NI) number. The payslip will also contain payments, wages, bonuses, and commission along with expenses, deductions, pension contributions, student loan payments, sick pay, benefits and any other deductions.
There is a lot of information on your payslipand you might also find it confusing due to the abbreviations that are used. So, what are a few of the common abbreviations and their meanings?
BACS – Bankers Automated Cleaning Services
BA/BP – Bereavement allowance/bereavement payment
CHB – Child benefit
CTC – Child tax credits
ET – Earnings threshold
HMRC – Her Majesty’s Revenue & Customs
LEL – Lower earnings limit
NIC – National Insurance contributions
PAYE – Pay As You Earn
PILON – Pay in Lieu of Notice
PP – Personal pension
SAP – Statutory Adoption Pay
SSP – Statutory sick pay
VAT – Value Added Tax
What is a P45?
Another important document that you need to be aware of is a P45. A P45 is issued by an employer when an employee stops working for the business and the document shows how much tax has been paid from the salary so far in that tax year (the tax year begins and ends in April). The P45 must legally be given to an employee no matter the reason for them leaving the company and should be provided by the former employee to their new employer so that they are aware of how much income tax has been paid that year.
What is a P60?
A P60 is another document that every employee will receive no later than May 31st of each year (as long as they were employed since April 5th). This summarises the total amount of tax paid through PAYE in that financial year – you need to keep hold of this for proof of income when applying for a loan or mortgage, applying for tax credits or claiming overpaid tax.
If You Have Questions
Whether your employer has outsourced payroll to another company or if payroll is carried out in-house, you should always contact them to further clarify any questions or queries that you have. For queries that they cannot answer, you can contact HMRC directly.
Hopefully, this post will be useful and help you to have a stronger understanding of your payslip and other key PAYE forms that every employee receives.