Topic 12 - Earnings Flashcards
What must everyone who works pay?
- income tax
- NI contributions
What does income tax + NI contributions go towards?
- gov. to spend on health + pensions etc.
What does NMW stand for?
National minimum wage
What is the NMW?
- lowest hourly wage an employee can be paid
What are some exceptions to the NMW?
- voluntary workers
- ppl on work experience who aren’t trainees (interns)
- trainees on some gov. schemes
- prisoners
- members of armed forces
What is the max hours an employer can work?
- 48hrs per week
What working time regulations are employees entitled to?
- at least 11 consecutive hours’ rest
- I day off a week
- 20min break if working day > 6hrs
- if working 5 days/week = 5.6 weeks paid holiday
Working time regulations don’t apply to
- armed forces
- emergency services
- domestic workers in private households
How is income tax paid?
- according to how much an individuals income is
What is a personal allowance?
- income an individual receives before paying income tax
What does a tax code tell u?
- how much u can earn before paying income tax
What is a personal savings allowance?
- taxpayers earn certain amounts in savings interest tax free
- basic rate = £1,000
- higher rate = £500
Who doesn’t have to pay NI contributions?
- young apprentices
What does the amount of NI contributions depend on?
- employment status + income
How are workers income tax + NI paid?
- by employer to HMRC through PAYE scheme
What are the 2 types of NI ppl self-employed can pay?
- class 2
- class 4
What are the 3 diff. PAYE documents?
- payslip
- P60
- P45
What does P60 show?
- all paid income tax + NI contributions at end of financial yr
What does P45 do?
- issued when employee leaves + provides summary of NI + income tax paid
What is a payslip?
- shows earnings before + after deductions
What does a P45 do?
- allows new employer to calculate how much income tax + NI to pay
What does the P45 show?
Employee’s:
- tax code + PAYE
- NI number
- leaving date
- earnings in tax yr so far
- income tax paid in tax yr
Why might some ppl need to complete a tax return?
- to tell HMRC about their earned + unearned income
- e.g. ppl paying Xtra income tax on savings interest/self employed
