Every month, your employer hands you a document that explains exactly where a chunk of your money went — and almost nobody reads it. Payroll departments will tell you the most common employee belief is that payslips are "probably right". Lesson four is about being able to check.
Gross, net, and the space between
Gross pay is the job-advert number; net (take-home) is what reaches your bank. The space between is income tax, National Insurance, usually a pension contribution, and a student loan repayment if you have one. Budget from net, always — half of all budgeting disasters begin with someone planning around their gross salary.
The slice system (and the myth it kills)
Income tax works in slices. For 2026/27 in England, Wales and NI: the first £12,570 is tax-free (your personal allowance), the slice from there to £50,270 is taxed at 20%, the next slice at 40%, and above £125,140 at 45%. The crucial word is slice: moving into a higher band taxes only the income above the line, never your whole salary. "I don't want the pay rise, it'll push me into the next bracket" is Britain's most persistent money myth — a rise always increases your take-home through income tax. (A handful of genuine cliff-edges exist elsewhere in the system, around child benefit and childcare support at higher incomes — but the tax bands themselves are slices, full stop.)
National Insurance: the second tax with a job
NI is a separate deduction (8% on earnings between £12,570 and £50,270, 2% above) historically tied to funding the State Pension and NHS. Here's the part worth knowing young: your NI record — the years you've paid or been credited — determines your State Pension entitlement, and you typically need 35 qualifying years for the full amount. Gaps happen (time abroad, caring, low-income years) and can sometimes be filled. It's the least glamorous number in your financial life and one of the most valuable.
The tax code: four characters running the show
That little code — 1257L for most people — tells your employer how much tax-free allowance to give you. Wrong code, wrong tax, simple as that. New job? You might sit on an emergency code for a payslip or two and overpay temporarily. Multiple jobs, benefits like a company car, or HMRC clawing back an old underpayment all change the code. Checking takes two minutes in your personal tax account on GOV.UK, and millions in overpaid tax gets refunded every year to the people who bothered to look.