What Do the Letters on a Payslip Mean?
When reviewing your payslip, you might notice letters next to your National Insurance category or tax code. These letters represent specific categories that help determine how much tax and National Insurance you pay.
For example, the letter “A” typically means you’re a standard employee paying the usual National Insurance rates. “H” is used for apprentices under the age of 25, who benefit from reduced employer contributions.
Similarly, tax codes include letters to show what tax-free allowances you're entitled to. Most people will see “L” in their tax code, which means you qualify for the standard personal allowance. Other letters might indicate more complex tax circumstances, such as multiple jobs or benefits in kind.
Understanding these codes helps ensure your deductions are correct - and if something doesn’t look right, it's a good idea to check with your employer.
National Insurance Category Letters:
A: Standard employee, generally for those between 21 and State Pension age.
B: Married women or widows with a certificate of election, allowing for reduced National Insurance contributions.
C: Employees who have reached State Pension age.
H: Apprentices under 25.
Tax Code Letters:
L: Indicates the standard tax-free allowance for most employees.
0T: Used when an employee has not provided enough information, or their Personal Allowance has been used up.
BR: Indicates a second job or pension, with deductions at the basic tax rate.
Other Letters:
R: Indicates an arrears payment or deduction, meaning it's backdated to a previous period.
NP: Indicates pay is not pensionable.
P or PENS: Indicates pay is pensionable.
W1 or M1 or X at the end – These are emergency tax codes, used if HMRC does not get your income details in time after a change in circumstances (i.e. a job, working for an employer after being self employed
Information On Your Payslip
A UK payslip is a legal document that must include certain information to comply with employment law and help employees understand their earnings and deductions.
According to UK employment law, a payslip must include:
Gross pay – The total earnings before any deductions.
Deductions – Itemised where possible, including:
Income Tax (PAYE)
National Insurance contributions (NICs)
Pension contributions (if applicable)
Student loan repayments
Net pay – The amount paid to the employee after deductions.
Method of payment – E.g., BACS transfer, cheque, or cash.
Breakdown of hours worked – If pay varies based on time worked (e.g., hourly staff), payslips must show hours worked.
Holiday Pay or Leave Balance
For hourly, casual, or part-time workers, payslips often include a section for:
Accrued holiday entitlement: The number of hours or days of leave earned so far.
Holiday taken: Leave already used in the current leave year.
Remaining balance: How much leave remains.
Displaying this helps avoid confusion about entitlement and encourages employees to manage their time off responsibly.
Expenses or Reimbursements
If employees incur costs on behalf of the company - such as travel, accommodation, or client entertainment - these can be:
Reimbursed via payroll: These payments may appear on the payslip as non-taxable items, clearly separated from earnings.
Taxable benefits: Some reimbursed expenses might be subject to tax or NI depending on how they’re processed.
Including these on the payslip offers transparency and helps with personal budgeting.
Maternity, Paternity, and Adoption Pay
Employees who are eligible for statutory maternity, paternity, or adoption leave should see the following on their payslips:
Maternity pay: Paid to those on maternity leave, typically for up to 39 weeks.
Paternity pay: Paid to fathers or partners during paternity leave, usually for up to 2 weeks.
Adoption pay: Available to those adopting a child, usually with the same conditions as maternity leave.
These payments should be itemised separately from regular salary to help employees track their entitlements.
Sick Pay
Employees who are off work due to illness may be entitled to Statutory Sick Pay (SSP) or company sick pay. This will be shown on their payslip as:
SSP: The minimum amount the government provides during illness, typically up to 28 weeks.
Company sick pay: If the employer offers enhanced sick pay, it will appear separately.
This ensures employees are aware of the support they are receiving when unwell.
Student Loan Repayments
For employees who have taken out a student loan, the repayments are often automatically deducted from their salary. There are two main types:
Plan 1: For loans taken out before September 2012.
Plan 2: For loans taken out after September 2012.
The amount deducted depends on the employee’s income, and this will be shown on the payslip for transparency.
Court Orders and Child Maintenance
If an employee is subject to a court order, such as for debt repayment or child maintenance, deductions will be made directly from their pay. These deductions will typically appear separately on the payslip and will include:
Court-ordered payments: Such as repayments for debts, fines, or other legal requirements.
Child maintenance: Deductions for supporting children, typically arranged through the Child Maintenance Service.
Other Benefits and Deductions
Many businesses offer salary sacrifice schemes or deductions for optional benefits. These may include:
Childcare vouchers (for older schemes still in operation)
Cycle to Work scheme deductions
Company car contributions
Private healthcare premiums
These deductions should be clearly labelled so employees understand what they're contributing toward- and how it affects their take-home pay.
Abbreviations On Your Payslip
Here’s a quick guide to some common acronyms and abbreviations you may see on your payslip:
Parental Pay: SMP, SPP, SAP & ShPP
SMP: Statutory Maternity Pay – Paid to mothers after childbirth.
SPP: Statutory Paternity Pay – Paid to fathers or partners after the birth.
ShPP: Shared Parental Pay – For parents sharing time off after the birth.
SAP: Statutory Adoption Pay – Paid to parents who have adopted a child.
BA
Bereavement Allowance – Paid weekly to widows, widowers, or surviving civil partners.
CHB
Child Benefit – A payment for parents with children under 16.
CTC
Child Tax Credits – Available for parents with children under 16.
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At Mascolo & Styles, we understand the complexities of payroll and are committed to providing reliable, accurate, and timely payroll services for businesses of all sizes. With years of experience in the industry, our team ensures that your payroll runs smoothly, and all statutory obligations, including tax codes, benefits, and deductions, are handled with precision. We take the stress out of payroll management, allowing you to focus on running your business with confidence.
Contact us today to learn how we can support your business with our tailored payroll solutions.
