Understanding your Tesco Payslip: A Quick Guide

Do you understand everything on your payslip? 🤔

We all probably know which day of the month we get paid and how much money we’re likely to receive, but many of us do not understand the little slip of paper that comes along with it. 

All the different numbers, letters and codes can seem like gibberish at first glance. But it’s easier to figure out than you might think. 

We’re here to teach you the lingo and break down the most common areas that you’re likely to see so that next time you get paid, you know exactly how to read your payslip.

1. Tax code: This code helps inform your employer how much income tax to take from your pay. Every year, millions are hit by tax-code errors, resulting in paying too much tax month-to-month, so it’s worth checking! The most common code for most employees is 1257L, as seen above. The first 4 digits represent how much personal allowance (tax-free income) you’re entitled to that tax year. The code “1257”, for example, indicates that you can earn £12,570 a year without paying tax, which is the standard tax-free allowance in 2023/24. The letter within the code represents your personal circumstances and how they affect your personal allowance. For example, the letter “L” indicates that you are entitled to the standard, tax-free personal allowance. There are many other possible options which you can find on here. 

2. National Insurance (NI) Number: This is a personal code that is unique to you, which you keep throughout your lifetime. Among other things, it’s used to make sure that your tax and national insurance contributions (which fund your entitlement to state pension and some benefits) are recorded accurately against your name. The number is usually made up of two letters followed by six numbers and one final letter e.g. QQ 123456 A.

3. Hourly rate: Exactly that -  if you are paid hourly, this is the amount that you are paid per hour of work. If you’re paid a salary, you’ll see this in a similar section.

4. Payment method: This indicates how you will be paid, which is probably directly into your bank account. But if you happen to have made another arrangement, such as cheque, it will be listed here.

5. Basic pay: This area highlights your gross income (before tax) for this pay period. We can see above that the employee has worked 144 hours and earned £1,440.14, before tax.

6. Expenses: The subject of many infamous scandals! Expenses are costs that you’ve incurred on the job that your company reimburses. We can see here that the employee has been paid £50 for petrol, but your contract could also include other types of expenses relevant to your work.

8. Total payments: All your earnings, expenses and other payments totted up before tax is taken. 

9. Employee National Insurance (NI): NI is a type of tax paid on earnings. Here you can see the NI contributions that have been deducted from your total payments for this pay period.

11. Total deductions: This is the total amount that has been deducted from your gross pay. This could include tax, National Insurance as well as pension contributions and other benefits you’ve chosen to pay directly from your salary, such as cycle to work, or Save As You Earn (SAYE).

12. Net pay: This is your take-home pay for this pay period. This will usually be your total payments minus your total deductions.

13. Employer National Insurance (NI): These are the National Insurance contributions that Tesco has paid in this period.

14. Your YTD  (Year To Date) totals: Here, you’ll find different running totals throughout the tax year; including gross pay, net pay, National Insurance and tax. In the example above, it shows pension contributions, student loan payments and Save as You Earn.  However, yours may look different depending on your circumstances and the benefits you’ve chosen to pay directly from your salary. This section may also be referred to as 'Totals to date' on your payslip.

15. Employer pension contributions (YTD): This is the total amount that your employer has contributed to your workplace pension so far during the tax year. In addition, you may see another section on your payslip that indicates how much your employer has paid in this specific pay period.

16. Retirement Savings Plan - Salary Sacrifice: This is the amount that you have contributed to your workplace pension for this pay period. The term “salary sacrifice” essentially means that your payment has been taken before any deductions like tax and NI. This generally means that you pay less NI (and potentially tax) overall in comparison to some other ways of contributing to your pension. You may see these contributions referred to as SMART payments in other Tesco documents. To see your Tesco pension dashboard, click this link.

So, that’s it! Everything you’re likely to see on your payslip in one easy-reference article. Of course, depending on your situation - whether you’re paid a salary or hourly wage, have your pension deducted via SMART payments or not - your payslip may look slightly different, but these are the main sections you’re likely to see. 

For further context, please see the two example payslips that were used for this article below in full.

And finally, if you think that there are any problems with your payslip, speak to your HR department, or alternatively contact HMRC.

Payslip example 1

Payslip example 2