Top 6 reasons why you absolutely should keep track of your payslips!

June 27, 2024
, by  
Claire Ashworth

I don’t think I’ve ever paid much attention to my payslips. I was certainly never taught about them at school and my parents’ wise words may have fallen on closed ears. Even in my wiser years, I’ve just always stuffed them in a cupboard or latterly, ignored the portal notification email in my inundated inbox.

So why do we need to keep track of our payslips? The figure at the bottom of the document – the total that will actually hit my bank account – is all that matters. Or so I thought. In recent months, I’ve discovered the significance of those grey little documents and how crucial it is to keep them safe…

1. Understand your earnings and deductions

A payslip provides a detailed breakdown of your earnings and deductions. It includes your gross pay, net pay, tax deductions, National Insurance contributions, pension contributions, and any other deductions. Understanding this helps you:

  • Verify Your Salary: Ensure that you are being paid the correct amount for the hours you’ve worked.
  • Monitor Deductions: Check that the deductions being made are accurate and lawful.

2. Tax compliance and planning

Payslips play a crucial role in tax compliance and planning. They help you:

  • File Accurate Tax Returns: When it comes to filing your annual tax return with HMRC, your payslips provide the necessary proof of income and tax paid.
  • Claim Tax Relief: If you are entitled to any tax reliefs or allowances, your payslips can serve as evidence to support your claims.
  • Avoid Penalties: Keeping track of your payslips ensures that you are complying with tax regulations and can help avoid potential fines or penalties from HMRC for underpayment or non-compliance.

3. Employment rights & dispute resolution

Payslips are an important tool for verifying and asserting your employment rights. They help ensure:

  • Minimum Wage Compliance: Your payslips confirm you are being paid at least the National Minimum Wage or National Living Wage.
  • Correct Hours: They verify that you are being paid correctly for the hours you have worked.
  • Identify Mistakes Promptly: If there is a mistake in your pay, such as incorrect hours recorded or wrong deductions, you can raise the issue with your employer immediately.
  • Provide Evidence: In case of any disputes with your employer regarding pay, your payslips serve as official documentation to support your case.

4. Applying for loans and mortgages:

When applying for loans, mortgages, or any form of credit, financial institutions in the UK often require proof of income. Payslips serve as a reliable source of this information, providing lenders with the assurance that you have a steady income. Without payslips, it might be challenging to secure a loan or mortgage, or you may face delays in the approval process. They assist you to:

  • Secure a Mortgage: Lenders typically ask for several months’ worth of payslips to assess your financial stability.
  • Obtain Personal Loans and Credit Cards: Your payslips help lenders determine your ability to repay the loan or credit.

5. Employment verification & benefits claim

Payslips can be essential for:

  • Job Applications: Some employers (although I’ve never been asked!) may request your payslips from previous jobs as part of the hiring process to verify your employment history and salary.
  • Proof of Employment: Payslips can serve as proof of employment for visa applications, rental agreements, and other official purposes.
  • Benefits Claims: If you need to claim state benefits or Universal Credit, payslips are often required to assess your eligibility and the amount you are entitled to receive.

6. Pensions and Retirement planning

Payslips provide a record of your pension contributions. Keeping track of these helps you:

  • Monitor Contributions: Ensure that your employer is making the correct pension contributions on your behalf.
  • Plan for Retirement: By understanding how much you are contributing to your pension, you can better plan for your retirement and make informed decisions about savings and investments.

How should you keep track of them?

Physically – if you prefer paper copies, keep them in a folder in a safe, organised cabinet!

Digitally – if you prefer digital copies, often employers have portals where you can retrieve and store your payslips. Beware though, when you change jobs, you may lose access to the portal. Or you may simply suffer from portal fatigue – there seems to be a portal for everything these days…

Alternatively, be in control of your payslips by storing them in your Auderli account! In our Tax & Work section, you can now organise all your payslips per tax year, as well as P60s and P45s to name a few other vital (not boring!) employee documents. No more hunting around over-flowing, old filing cabinets or desperately trying to remember the password of yet another portal! I am of course a little biased but in Auderli, you will always find your payslips just when you need them most.

While it might seem like a small and tedious task, the benefits of organising your payslips are significant. They provide you with the peace of mind that comes from knowing you have accurate, detailed records of your earnings and deductions, empowering you to navigate your financial and professional life with confidence. So next time you receive a payslip, don’t just glance at it but store it somewhere safe and accessible. You will be grateful.

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