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Net pay

Also called: Take-home pay

What is net pay?

Net pay is gross pay less deductions.

Deductions are the amounts taken off, such as income tax, National Insurance and pension.

Net pay is what is left, and what is paid into the employee's bank.

Example

Gross pay for the month is £2,300.00 and the deductions add up to £480.00. Net pay is £1,820.00.

Why it matters

Extra gross pay is not all the employee's to keep. Tax, National Insurance and pension are taken from the extra as well.

Practise it

  1. 1Gross pay and net pay: what is the difference?7 min, easyFree
  2. 2How to read your payslip6 min, easyFree
  3. Gross pay, deductions and net pay in the books10 min, mediumPremium
Practise it nowGross pay and net pay: what is the difference?

Ledger Drill is practice, not tax or accounting advice. If this looks wrong, tell us at [email protected].