Payslip Glossary – UK Payroll Terms Explained

Payslips can feel confusing. They often include abbreviations, numbers and terms that aren’t easy to understand if you don’t work in payroll every day.

This glossary explains the most common terms you might see on a UK payslip, in clear and simple language. Whether you are an employee trying to understand your payslip, or you work in finance or HR and need to explain payroll to others, this guide will help.

Payments

Added hours / Overtime

Pay received for working beyond contracted hours. Overtime can be paid at a flat rate or with an enhanced premium (e.g. “time and a half”, “double time”). The rate and rules are set by your employment contract.

Advance pay

Occasionally, an employer may give part of your salary in advance. This will usually be deducted from your next payslip. In some cases, employers refer to this as a “loan” due to PAYE rules.

Back pay

A payment covering underpaid wages from a previous period. This could be due to payroll errors, late pay rises, or union negotiations. During maternity leave, employers must recalculate pay to reflect back-dated rises (known as the Alabaster rule).

Basic pay / Gross salary

The core pay for contractual hours worked. Additional hours are usually shown separately as overtime or “added hours”. If an employee works fewer hours than contracted, payslips may show a “short hours” deduction. Employers must comply with National Minimum Wage regulations.

Car allowance

An allowance provided when an employer requires an employee to have a car, but does not provide a company vehicle.

Commission or bonus

Extra earnings linked to achieving sales or performance targets. This can be contractual or discretionary.

Compensation

A payment made to settle a breach of contract or to end employment by agreement (sometimes called a compromise agreement). May be taxable depending on circumstances—legal advice is recommended.

C/F or B/F

Abbreviations for “Carried Forward” (C/F) and “Brought Forward” (B/F). Used when deductions exceed pay, leaving an outstanding balance to be carried over to the next payroll.

Ex-gratia

A goodwill payment, usually one-off, made in recognition of special service or contribution. It is not contractual.

Expenses

Reimbursement of costs incurred for business purposes, e.g. travel or meals when working away. To be non-taxable, they must be wholly work-related and follow company policy.

Fees

A fixed payment for personal services, e.g. consultancy work. Unless invoiced as self-employed, this is subject to PAYE and NIC.

Firefighter allowance

A payment for employees trained to perform additional fire safety duties in the workplace.

First aid allowance

An allowance for employees formally appointed as first aiders. Treated as taxable earnings.

Holiday pay

Payment for annual leave taken or accrued leave not taken (e.g. when leaving employment). UK law entitles full-time staff to 5.6 weeks (28 days) paid holiday per year (pro-rata for part-time), inclusive of bank holidays.

Honorarium

A discretionary payment, often made for temporary or voluntary duties (e.g. covering another role due to sickness).

Hours on payslip

Since April 2019, payslips must show hours worked when pay varies based on time worked. This can be displayed as a single total or broken down by rate/type.

Jury pay

If called for jury duty, employees may receive normal pay or have deductions made to offset payments received from the court.

London / Regional weighting

Additional pay recognising the higher cost of living or working in certain locations, such as London.

Occupational Adoption Pay (OAP)

Extra pay some employers provide on top of Statutory Adoption Pay (SAP). Conditions and amounts vary by employer policy.

Occupational Maternity Pay (OMP)

Employer-provided enhancement to Statutory Maternity Pay (SMP). For example, some employers “top up” pay during the first weeks of leave. Not a statutory right—check your contract or handbook.

Occupational Paternity Pay (OPP)

Employer-provided enhancement to Statutory Paternity Pay (SPP). Amounts and eligibility differ by employer policy.

Occupational Sick Pay (OSP)

Employer-provided sick pay, in addition to Statutory Sick Pay (SSP). Schemes often depend on length of service and company policy.

Pay in lieu of notice (PILON)

A payment made instead of requiring an employee to work their notice period. Tax implications apply.

Redundancy pay

A payment made when employment ends because a role no longer exists. Statutory redundancy pay is tax-free up to £30,000. Employers may offer more generous packages.

Relocation pay

A payment to help cover costs of moving for a job. If certain conditions are met, it can be exempt from income tax and NIC.

Shift pay / Allowance

Extra pay for working unsociable hours (e.g. nights, weekends). May be a premium rate or a flat allowance.

Staff suggestion scheme

Some employers reward staff for business-improving ideas. Payments are taxable unless invoiced separately by the contributor as self-employed.

Statutory Adoption Pay (SAP)

Pay available to eligible employees on adoption leave. The amount is set by the government and reviewed annually (April).

Statutory Maternity Pay (SMP)

Pay available to eligible women on maternity leave. The rate is set by the government and updated annually (April). Employers must also adjust for back-dated pay rises under the Alabaster rule.

Statutory Paternity Pay (SPP)

Pay available to eligible employees during paternity leave. The rate is government-set and updated annually (April).

Statutory Sick Pay (SSP)

Pay available to eligible employees during sickness absence (minimum 4 consecutive days off, subject to an earnings threshold). The rate is government-set and updated annually (April).

Statutory Neonatal Care Pay (SNCP)

A statutory payment available to eligible employees who need to take time off work to care for their baby receiving neonatal care. The rate is set by the government and normally changes each April. Entitlement depends on meeting qualifying conditions, including length of service and earnings thresholds.

Occupational Neonatal Care Pay (ONCP)

Some employers may offer additional pay to “top up” the statutory amount, often for a certain number of weeks. This varies by employer policy and is not a statutory entitlement. Employees should check their employment contract or company handbook for details.

Deductions

Additional Voluntary Contributions (AVCs)

Extra pension contributions you choose to make on top of your regular pension scheme deductions. AVCs qualify for tax relief, meaning the amount paid reduces your taxable pay.

Any other deduction

Employers may include other authorised deductions, such as trade union subscriptions, savings clubs or social clubs. These must be agreed by you in advance.

Charitable Payroll Giving

A voluntary scheme where you donate to one or more charities directly through payroll. Donations reduce your taxable pay, lowering the income tax you owe.

Court orders

Deductions ordered by a court or authorised body, such as:

• Courts (civil debts or fines)

• Local authorities (e.g. council tax arrears)

• The Department for Work and Pensions

• The Child Maintenance Service

Employers are legally obliged to process these deductions when instructed.

Income Tax

The amount of tax deducted from your pay as required by law. Tax is calculated on taxable pay (gross pay minus any tax-free items, such as pension contributions or Payroll Giving donations).

Loan repayment (employer loans)

If your employer has provided you with a loan, repayments will show as deductions on your payslip. Some loans may be tax-free if they fall under HMRC exemptions; others may count as a benefit in kind and be taxable.

National Insurance (NI)

The contribution you make towards the UK’s social security system. The amount depends on your earnings and your NI category letter. Employers are responsible for deducting this from your pay.

Pension contributions

If you’ve been automatically enrolled, or have opted into your employer’s pension scheme, deductions will be shown on your payslip. Pension contributions may qualify for tax relief.

Save As You Earn (SAYE)

A savings scheme run by some employers, usually linked to employee share option plans. Regular deductions are taken from your pay and saved over a fixed period.

Student Loan repayments

If you borrowed a student loan while studying, repayments will be deducted once your earnings pass the relevant threshold. The repayment rate depends on your loan plan type (Plan 1, 2, 4 or 5). Employers deduct repayments based on instructions from HMRC.

Pensions

Common Pension Providers in the UK

Some of the most widely used workplace pension providers are:

• NEST (National Employment Savings Trust)

• Smart Pension

• NOW: Pensions

• The People’s Pension

• Aviva

• Royal London

• Penfold

Employers may work with different providers depending on company size, industry and employee needs.

Pension contribution methods

Net Pay Arrangement

Employee contributions are deducted from pay before income tax is calculated. This means contributions automatically receive full tax relief at the individual’s highest marginal rate. However, employees earning below the income tax threshold do not receive any tax relief under this method.

Relief at Source

Contributions are taken after income tax has been calculated. The pension provider then claims back 20% tax relief and adds it to the pension pot. Higher or additional rate taxpayers can claim further relief through self-assessment.

Salary Sacrifice (also called Salary Exchange)

An arrangement where an employee agrees to give up part of their salary, and the employer pays it into the pension on their behalf. This reduces gross pay for both tax and National Insurance purposes, offering savings for both employer and employee.

FAQs – Payslip Glossary

What is the difference between gross pay and net pay?

Gross pay is the total amount you earn before any deductions, such as tax, National Insurance, pension contributions or student loan repayments. Net pay (sometimes called “take-home pay”) is the amount you actually receive in your bank account after all deductions.

Why does my payslip show different types of pay?

Payslips often separate different types of pay (basic pay, overtime, bonuses, allowances, holiday pay, etc.) so employees can clearly see how their total earnings are made up. This helps with transparency and ensures statutory rights, such as National Minimum Wage, are met.

What does C/F or B/F mean on a payslip?

C/F stands for “Carried Forward” and B/F stands for “Brought Forward”. These abbreviations are used when deductions exceed pay in one period and are carried over to the next payroll.

Why are my student loan repayments deducted automatically?

If you have a student loan, your employer is required by HMRC to deduct repayments through payroll once your earnings exceed the relevant threshold. The repayment rate depends on your plan type (Plan 1, 2, 4 or 5).

Do all employers offer Occupational Maternity Pay or Sick Pay?

No. Statutory Maternity Pay (SMP) and Statutory Sick Pay (SSP) are legal entitlements, but occupational schemes are optional and depend on employer policy. Employees should check their contract or handbook to see if enhanced pay is offered.

Why does my payslip show hours worked?

Since April 2019, UK law requires payslips to show hours worked if pay varies depending on time worked. This ensures transparency and makes it easier to check you are being paid correctly.

Are expenses always tax-free?

Not always. Expenses must be wholly, exclusively and necessarily for work purposes (e.g. travel between offices, meals while working away). Personal or mixed-use expenses may be taxable. Employers usually set policies that align with HMRC rules.

What happens if I am paid in advance?

Advance payments are deducted from your next payslip. Sometimes employers label these as “loans” for PAYE purposes. It’s important to check how your employer records and deducts advance pay to avoid confusion.