Why it’s important to understand your payslip
November 29, 2009 by admin
Filed under Career News and Advice
Payslips are funny things. We yearn for them, count the days until their arrival enables our bank accounts to emerge from red into black, then celebrate with lunches and after-work drinks. Yet when we have them in our hands, we don’t know quite what to do with them. We puzzle over their contents, embarrassed at how little we comprehend all those mystifying figures about PAYE, national insurance (NI) contributions and tax to date.
Employers are legally obliged to give employees an itemised payslip whenever they are paid, but most people don’t understand them, says Karen Thomson, the associate director at the Institute of Payroll Professionals. “Most people think, oh yeah, then file it or bin it.”
Yet it’s entirely possible that lurking in that maze of numbers there is a mistake. You could be paying too much income tax, your pension contributions could be wrong or your perks may have been miscalculated.
“Error rates are very low,” says Thomson but mistakes do happen, and unlocking the intricacies of your payslip is the only way to avoid what might later turn out to be a major headache.
What follows is by no means an exhaustive guide, but it should cover the biggest potential causes of grief.
Check your gross pay: This is the amount you are paid before any deductions, so your first step should be to check you are being paid the agreed amount. Gross pay includes overtime and bonuses, and these will usually be shown separately. Clearly, if it is a monthly payslip, and there are no extras, you need to multiply the figure by 12 to check it matches your contracted annual salary.
Check your tax code: Your tax code determines how much of your income is subject to tax, and codes vary depending on your circumstances. For most people, the code will be 647L. If you’re unsure, check with HM Revenue & Customs (HMRC).
Check your national insurance payments: If you earn more than £110 a week you will pay national insurance on your earnings at 11%. This should be listed on your payslip separately from the income tax you are paying. If you don’t pay enough NI, you may jeopardise your rights to state benefits such as sick pay, jobseeker’s allowance and a state pension, so make sure the payments are correct.
Read the original article at Guardian
Hey, I work at Woolies and like most things when you forget about things, you cant find them anymore. This will save the trees man, its simple everyone should do this. By the way I dont know where to look for my payslips & group cert, can you help?