Understanding Payslips for Students

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What is a Payslip?

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A document showing your earnings and deductions.

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What does the term Gross Pay mean?

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Gross Pay is the amount you earn before deductions

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What does the term Net Pay mean?

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Net Pay is the amount of money you earn after all deductions.

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What is a Tax Code

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a Tax Code is a series of letters and numbers that tells how much tax to pay.

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What is National Insurance?

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National Insurance is a deduction from your pay that pays for state benefits.

NHS, pensions, and unemployment support.

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What is a Pension Contribution?

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A deduction in pay that puts money away for retirement.

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Can you give an example of Deductions on a Payslip?

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Income Tax (PAYE) – Tax deducted based on earnings and tax code.

National Insurance (NI) – Contribution towards state benefits and pension.

Student Loan Repayments – Deducted if earnings exceed the repayment threshold.

Pension Contributions – Employee contributions to a workplace pension scheme (e.g., auto-enrolment).

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What does a Tax Code of 1257L Mean?

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1257L means that that person has a tax free allowance of £1,257