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UK Payroll Glossary

Gross pay

Gross pay is the total amount an employee earns in a pay period before any deductions are taken off. It sits at the top of every UK payslip as the starting figure from which Income Tax, National Insurance, pension contributions, and other deductions are subtracted to arrive at net take-home pay. Gross pay includes salary, overtime, bonuses, commission, holiday pay, and statutory pay such as SMP or SSP. It is the number used in mortgage applications, employment contracts, and job advertisements, not the lower amount that actually lands in the bank.

Last updated May 2026

What's included in gross pay

Gross pay covers every element of earnings an employee receives before any deductions are applied. The most common components are:

  • Basic salary or hourly wages: the contractual amount for ordinary hours worked in the period.
  • Overtime: additional hours paid at the normal rate or a premium rate agreed in the contract.
  • Bonuses and commission: performance payments, target bonuses, and sales commission all form part of gross pay in the period they are paid.
  • [Holiday pay](/glossary/holiday-pay): payment made while an employee takes statutory or contractual annual leave. For variable-hours workers, this must reflect normal pay including regular overtime and commission.
  • Statutory pay: Statutory Maternity Pay, Statutory Sick Pay, and Statutory Paternity Pay all appear as components of gross pay; they are taxable through PAYE in the same way as salary.
  • Tips paid through payroll: tips routed via the payroll are taxable and form part of gross pay; cash tips paid directly by customers sit outside the payslip entirely.

A few things are not included in gross pay: genuine expense reimbursements (travel costs repaid at the actual amount spent, not a round-sum allowance), redundancy payments up to the tax-free limit, and one-off gifts that qualify as trivial benefits under HMRC's rules.

Gross pay on the payslip

Gross pay occupies the top section of a UK payslip. Most payroll software breaks it out by element (a line for basic salary, a separate line for overtime, another for any bonus) before showing a subtotal labelled "gross pay" or "total gross".

Alongside the current-period figure, payslips often include a year-to-date column showing cumulative gross since 6 April, the start of the UK tax year. This running total is what the payroll software uses to calculate the correct Income Tax under a cumulative tax code. It ensures that by the end of March the right amount of tax has been collected for the year as a whole, even if pay varied month to month.

The gross figure reported to HMRC via the FPS submission on each payday is this same gross pay, not the net amount.

Gross pay vs salary

Salary is the contractual base rate agreed in an employment contract. Gross pay is the actual total earned in a specific period: it can be higher than salary in months with overtime or bonuses, and lower in periods of statutory pay only.

This distinction matters most in mortgage applications. Lenders calculate affordability as a multiple of gross annual income and typically ask for P60s and recent payslips as evidence. They want the gross figure, not the net pay that arrives in the bank. A P60 shows total gross pay for the tax year; a payslip shows gross for each period. If bonus income is significant but variable, some lenders average it across two or three years.

In Ghugi terms: Ghugi delivers the payslip PDF your payroll software produced. The gross pay figure on that payslip is exactly what the software calculated. Ghugi reads and routes the document; it never recalculates or modifies any pay figures.

Related terms

Net payNet pay is what an employee actually receives in their bank account on payday: their gross pay minus Income Tax, National…PAYEPAYE is HMRC's system for collecting Income Tax and National Insurance directly from employees' wages before the money reaches…PayslipA payslip is the document showing what an employee was paid for a specific period, usually a week or a month.Holiday payHoliday pay is the wage an employee receives while they're on annual leave.

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Disclaimer: This glossary is for general guidance. Specific UK tax thresholds and statutory rates are checked at publication and re-reviewed every April; always verify against the official gov.uk pages for the current tax year. Ghugi is not a payroll provider and does not give tax or legal advice. For your situation, ask your accountant or HMRC directly.