Income, payslips and tax

Gross pay is the total you earn before anything is taken off.
Deductions are taken off, such as Income Tax, National Insurance and pension contributions.
Net pay (take-home pay) is what you receive after deductions.
Your payslip shows all of these. Most employees pay tax through PAYE (Pay As You Earn), where the employer takes it off before paying you.

Most people can earn a certain amount each year without paying Income Tax: the Personal Allowance. In England, Wales and Northern Ireland in the 2026 to 2027 tax year it is £12,570.
Income above that is taxed. The basic rate is 20% on the next band of income; higher incomes pay higher rates. (Scotland sets its own rates and bands.)
Example: on £20,000, the taxable part is £20,000 minus £12,570 = £7,430. 20% of that is £1,486.
National Insurance is paid by workers over 16 above a threshold, and builds up entitlement to the State Pension.

Taxes pay for public services such as the NHS, schools, defence, roads, the police and benefits and pensions.
Other taxes include VAT (Value Added Tax, 20% on most goods and services), council tax and taxes on businesses' profits.
How much to tax and what to spend it on are big political questions, and parties disagree about them.