TL;DR
Your payslip shows gross pay, the deductions taken from it, and the net pay you receive. The main deductions are income tax and National Insurance through PAYE. Your tax code sets your tax-free pay: 1257L is the common code reflecting the 12,570 pound Personal Allowance. A wrong code can mean over or underpaying, and it can be corrected through HMRC.
Last reviewed: June 2026
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Key facts
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Reading the payslip top to bottom
A payslip has three core parts. Gross pay is what you earn before anything is taken off. The deductions section lists income tax, National Insurance and any pension or student loan amounts. Net pay, sometimes labelled take-home, is what is left and what arrives in your account.
Other details usually shown include your tax code, your National Insurance number, the pay period, and year-to-date totals. Checking these in your first month catches errors early, when they are easiest to fix.
Income tax bands and how PAYE spreads them
Income tax is charged on earnings above your Personal Allowance, frozen at 12,570 pounds. Above that, earnings are taxed in bands. The table below shows the England and Northern Ireland bands for 2026/27. Scotland sets its own income tax bands and rates, so Scottish taxpayers should check the Scottish figures.
PAYE spreads your expected tax across the year, so each payslip deducts a share rather than leaving a single bill. Starting a job partway through a tax year, or holding more than one job, can produce temporary over or underpayments that correct over time.
| Tax code | What it means |
|---|---|
| 1257L | Standard tax-free Personal Allowance of 12,570 pounds |
| BR | All income taxed at the basic rate, often used for a second job |
| D0 | All income taxed at the higher rate |
| D1 | All income taxed at the additional rate |
| 0T | No allowance applied, often when details are missing |
| K codes | Deductions exceed the allowance, adding to taxable pay |
| W1, M1 or X | Emergency code, taxing each pay period in isolation |
Common UK tax codes. Verify your own code via your HMRC personal tax account.
What your tax code means
Your tax code tells your employer how much tax-free pay to give you. The common code 1257L reflects the standard Personal Allowance: the number is the allowance divided by ten and the letter describes your situation. The table below sets out the codes you are most likely to see and what each one means.
An emergency code can apply when you start a job before your employer has full details, which may mean paying more tax temporarily. It usually corrects once your details are processed, and any overpayment is refunded.
Fixing a wrong tax code
If your code looks wrong, for example you are taxed heavily from day one or your allowance seems missing, check it through your HMRC personal tax account and contact HMRC to correct it. Where you have overpaid, a refund follows once the code is fixed.
Keep your payslips and your end-of-year summary. They are the record you need to query tax, claim a refund, or prove your income when renting or borrowing.
| Band (England and NI) | Taxable income 2026/27 | Rate |
|---|---|---|
| Personal Allowance | Up to 12,570 pounds | 0% |
| Basic rate | 12,571 to 50,270 pounds | 20% |
| Higher rate | 50,271 to 125,140 pounds | 40% |
| Additional rate | Over 125,140 pounds | 45% |
England and Northern Ireland bands. Scotland sets different bands and rates.
Related guides |
This guide is editorial information based on official UK public sources as at June 2026 and is not financial advice. Figures and thresholds change: confirm current details with the official source before acting. Tax bands and codes shown apply to England and Northern Ireland for 2026/27. Kael Tripton Ltd is an independent publisher, is not regulated by the FCA, and takes no commission, quotes or lead fees on the products discussed. |
Frequently asked questions
What does the tax code 1257L mean?
It reflects the standard Personal Allowance of 12,570 pounds. The number is the allowance divided by ten, and the L is a standard tax situation.
Why am I paying tax in my first month?
PAYE spreads tax across the year, and an emergency code may apply before your employer has full details, which can mean paying more temporarily until it corrects.
What is the difference between gross and net pay?
Gross pay is your earnings before deductions. Net pay is what is left after income tax, National Insurance and any other deductions.
How do I fix a wrong tax code?
Check it through your HMRC personal tax account and contact HMRC. If you overpaid, a refund follows once the code is corrected.
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