Common Q&A for Payroll Services

Payroll can raise many questions, whether you are an employee trying to understand your payslip or you simply want to know how your tax and pension contributions are calculated. With changes in tax codes, P45 forms, and student loan deductions, it’s easy to feel confused about what happens behind the scenes.

In this guide, we address some of the most common payroll questions we receive,  from taxes and pensions to general payroll inquiries. Gain a clearer understanding of how payroll works and how to access specialist payroll services for your business. 

Tax/Tax Codes

Will you earn over £100k in a tax year?

If you think you will earn above £100k in any given tax year, you should check that you are on the correct tax code. HMRC reduces your personal allowance by £1 for every £2 you are over this threshold, so to minimise the chance of an underpayment at the end of the tax year, you may want to check your tax code regularly throughout the year. Tax is a personal liability, which means your employer or payroll provider is unable to check or advise on your tax code on your behalf.

You can check and update your estimated income either through your personal tax account or online at Check your Income Tax for the current year – GOV.UK. 

Pensions

My pension is based on qualifying earnings. What does this mean?

Qualifying Earnings (QE) refers to a specific range of your earnings that is used to calculate your pension contributions. For 2026/27, this range is between £6,240 and £50,270 per year, broken down to between £520 and £4,189 per month for monthly pay periods. 

QEs include: salary/wages, commission, bonuses, overtime, and statutory payments. This list is not exhaustive, so please contact your employer if you have specific queries about your pensionable pay. 

Based on a monthly pay period, your QEs are added together, and then anything between £520 and £4,189 is used for your pension calculation. This means that your pensionable pay is capped at £3,669 (£4,189 less £520) each month, regardless of how much you earn over this amount. For QE less than £4,189, you won’t pay pension on the first £520. For example:

1. For a monthly QE of £500, the pensionable pay is £0 as the amount is less than £520
2. For monthly QE of £2,333.33 the pensionable pay is £1,813.33
3. For monthly QE of £5,416.67 the pensionable pay is £3,669
4. For monthly QE of £8,333.33 the pensionable pay is £3,669

Will my pension be deducted before or after tax?

There are three main ways pension contributions can be structured,  and your employer will be able to confirm which applies:

• Pre-Tax (also known as ‘Net Pay Arrangement’): Your contribution is deducted before tax is calculated, so you receive the tax relief based on your rate of tax that period. 
• Salary Sacrifice: Your contribution is deducted before tax, and NI is calculated, so you receive the tax relief based on your current rate of tax that period and also NI at the current rate. Because your employer also saves on National Insurance, they may choose to pass some or all of that saving into your pension pot.
• Relief at Source: Your contribution is deducted after tax, and NI is calculated, and all employees receive basic rate tax relief which is 20% on their contribution, regardless of their current rate of tax. This is calculated by the employee only paying 80% of their contribution, and the remaining 20% is added to the pension directly from HMRC (for example, if your contribution was 5%, you would only pay 4% with the 1% as tax relief). This standard relief does not account for higher or additional rate taxpayers,  so if you fall into these categories, you can claim any additional tax relief through your Self-Assessment tax return.

Payroll frequently asked questions

Why has my tax code changed?

Only HMRC can confirm why a tax code has changed, but you will have received either a letter in the post or a notification through your personal tax account to make you aware of the change. You should have also received a breakdown of how your code was derived, so you can query anything that doesn’t look right. Your employer/payroll provider does not receive details of how you tax code has been calculated but has to apply any code issued by HMRC, so if you think you are on an incorrect code, you will need to contact HMRC and discuss any potential errors with them.

I paid more tax this month compared to last month, even though my salary stayed the same. Is there an error?

It’s worth looking back beyond the two payslips you’re comparing. If the new tax code was applied, the first month’s tax may include a catch-up adjustment from previous months, and so it isn’t a true representation of the amount of tax you will pay going forward. The following month’s payslip is a more reliable indicator.  Additional one-off payments can also affect future tax calculations, especially if they are subject to a higher tax rate than your normal salary.

I have received an additional payment this month. Have I been taxed twice?

You haven’t been taxed twice – here’s how it works: Tax is calculated on the month as a whole, not per individual payment. This means your tax was first calculated on your original pay, then recalculated once the additional payment was added – so you’re only ever taxed on your total earnings for the month. Any net pay you previously received is deducted from your new net pay, so you receive the difference, and the sum of both net pays is the total you would have received for the month had both payments been processed together.

I left my employment before the end of the tax year. Will I still get a P60?

A P60 is an end-of-year document confirming your total earnings and tax paid. They are only issued to workers by their current employer if they are still employed as of the 5th April. The deadline to receive a P60 is the 31st of May following the tax year end, and if you lose your version, your employer can reissue a copy, or you can find the information contained in the P60 via your personal tax account. If you have left employment before the 5th of April, you would have received a P45, which contains the same information. Please note that although you can receive a replacement P60, you cannot receive a replacement P45.

I lost my P45. Can I get a copy?

Unfortunately, a P45 cannot be reissued – it’s a one-time document.  If you are starting new employment, you can complete a new starter checklist, or you can confirm your earnings through your personal tax account if you need it for other reasons.

I have started a new job, but don’t have my P45 from my previous employer. Will I pay emergency tax?

Your new employer should ask you to complete a ‘starter checklist’ where you’ll select the statement that best describes your situation. Your tax code will then be determined by your new employer, following HMRC guidance based on your selection. HMRC will receive details of your joining your new employer on or before the first pay day, and you can always contact HMRC after this if you think your tax code is incorrect.

I have a student loan deduction this month, but my salary is below the threshold for my plan. Can I get this money back?

Student loan deductions are based on elements subject to National Insurance (NI) and are calculated on a pay period basis. If your NI-able pay is above the threshold for your plan during the pay period, deductions must be taken and cannot be overridden. If at the end of the tax year, your annual income is below the threshold, you can ask for a refund from the Student Loan Company (SLC), but this will not happen before the end of the tax year, as they will need to confirm your earnings with HMRC.

I have a student loan deduction on my payslip, but I don’t have a student loan, or I’m not due to repay yet. What should I do?

If you indicated on your starter checklist or your P45 showed you had a loan, you will need to contact the Student Loan Company to issue a stop notice (called an SL2 or PGL2 notice), and they will also confirm the refund process. Sometimes this will be through the payroll, or it could be direct to your bank account.

Disclaimer: Please note that this document is not intended to give specific technical advice and should not be construed as doing so.  It is designed to alert clients to some of the issues and is not intended to give exhaustive coverage of the topic.  Professional advice should always be sought before action is either taken or refrained from as a result of information contained herein. 

Get in touch about our payroll services team today.