Receiving your pay


What’s a payslip? How does income tax work, and who's responsibility is it to pay it, mine or my employer’s? Find out all the answers below.


It’s a good job we've got Poku Banks on hand to help! He’s a switched on personal finance influencer, and he's here to share his tips and advice on receiving your pay.

His money-savvy content is seen by thousands on his Instagram, TikTok and YouTube channels as well as the UK press.

We’ll let him do the talking to get you clued up on how to understand your monthly pay cheque works!

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Receiving your pay - what you need to know


Your payslip will include:

  • Gross pay – the full amount you are paid before any money is deducted for tax etc.
  • Net pay – the amount of money you ‘take home’. The amount you’re left with after tax etc. has been deducted.
  • Variable deductions – money deducted from your wage e.g. tax you pay on your income or National Insurance Contributions. These can change from pay day to pay day.
  • Fixed deductions – money deducted from your wage e.g. union fees. These are fixed.
  • Pension contribution – if you’re paying money into an optional pension scheme this will also be shown as a deduction.
  • Student loan – if you’re making repayments on a student loan this will also be shown as a deduction on your payslip.


Pay As You Earn (PAYE)

A method used by employers for deducting income tax and National Insurance Contributions. Your employer will automatically deduct income tax and National Insurance Contributions before paying your wage.

Income Tax

Income tax is an amount of money deducted from your pay. There are different levels of tax for different levels of earning. Some income is tax free. The money deducted goes to the government.

Read more about income tax levels on the government website.

National Insurance Contributions (NICs)

An amount of money deducted from your pay so you qualify for benefits such as the State Pension. There are different classes of NIC depending on how much you earn. The money deducted goes to the government.

Check the government website to read more about NIC classes.


If you are a freelancer you may be responsible for your own tax and NICs. This is called ‘self-assessment’. This means you need to submit records of your income to HMRC and they will calculate how much you owe. HMRC is Her Majesty’s Revenue and Customs, the government department concerned with taxes.

Read more about self-assessment on the government website.


A pension scheme is a type of savings plan to help you save money for later in life. A small amount of money is deducted from your pay cheque and put in a savings pot which you can then access when you retire. All pension schemes are optional.

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