Employed (PAYE)

Understand Your Payslip, Tax Code and PAYE

What every line on your payslip means, and what to do when the code is wrong.

8 lessons About 47 minutes By Laura Michelle Davis ✓ Reviewed by TaxFly Admin Figures for 2026/27
Every employed person has a tax code and most do not understand it. This course reads a payslip line by line, decodes the letters and numbers in your tax code, explains emergency codes and mid-year changes, and shows you what to do when HMRC has it wrong.

By the end of this course you will be able to

  • Read every line on your payslip and know what it is
  • Decode the numbers and letters in your tax code
  • Recognise an emergency or incorrect code
  • Understand student loan deductions and benefits in kind
  • Get an incorrect code corrected and reclaim overpaid tax

What you will cover

Module 1

Reading your payslip

Line by line, what each deduction is actually doing.

Most employed people never read their payslip properly, and the ones who do usually stop at the net figure. That is a shame, because the payslip is the only monthly statement you get of a tax position that is easy to get wrong and easy to fix.

This module reads a payslip end to end, then explains why two people on identical salaries can take home noticeably different amounts.

  1. 1.1 Your payslip, line by line Workshop · 6 min · includes a calculator
  2. 1.2 How gross becomes net Workshop · 6 min · includes a calculator
Module 2

Your tax code

What the numbers and letters mean, and how the code goes wrong.

Your tax code is the single most important number in your employment tax life, and almost nobody is ever taught to read it. It decides how much of your pay is tax free, and it is issued by HMRC based on information that is often incomplete or out of date.

These three lessons decode the standard format, explain emergency codes, and cover why HMRC changes your code mid-year without much explanation.

  1. 2.1 What your tax code actually means Lesson · 6 min · includes a calculator
  2. 2.2 Emergency codes and why they happen Lesson · 5 min · includes a calculator
  3. 2.3 When your code changes mid-year Lesson · 6 min · includes a calculator
Module 3

Deductions and fixing problems

Student loans, benefits in kind, and getting a wrong code corrected.

The last module covers the two deductions that most often surprise people, then the practical business of getting an incorrect code fixed and reclaiming anything you overpaid.

The reclaim part matters: overpaid PAYE does not always come back on its own, and the window for claiming is not indefinite.

  1. 3.1 Student loan deductions Lesson · 6 min · includes a calculator
  2. 3.2 Benefits in kind and your P11D Lesson · 6 min · includes a calculator
  3. 3.3 What to do when your code is wrong Your situation · 6 min · includes a calculator

Finish with the exam

10 questions covering the whole course. Score 80% or more and you get a certificate of completion. You can retake it as many times as you like.

The exam needs a free account, so we can save your result. The lessons themselves never do.

Go to the exam

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