Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

IFC Finance Course > Topic 3: Documents for pay and pay calculations > Flashcards

Topic 3: Documents for pay and pay calculations Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 66 flashcards SIE Exam flashcards Series 63 flashcards Series 79 Top-Off Exam flashcards Series 7 Top-off Exam flashcards CFA flashcards Series 65 flashcards
1
Q

What are earnings?

A

Earnings means the money you get for doing a job?

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are wages?

A

The word wages is usually used when talking about how much a person is paid per hour.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a salary?

A

The word salary is usually used when talking about a job for which the person’s pay is expressed as a yearly figure.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Name 2 things we have to pay to the government out of part of our earnings.

A
  • tax

- National Insurance contributions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Who collects all payments to the government?

A

HM Revenue and Customers (HMRC)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the payments to the government called?

A

Deductions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is gross pay?

A

Gross pay is the amount that we earn before any deductions are taken away.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is net pay?

A

Net pay is the amount that we receive after all deductions have been taken off. Net pay is sometimes also called “take-home pay”.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does PAYE stand for?

A

“pay as you earn”.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is PAYE?

A

PAYE is the way in which employees pay their tax. It is collected from their gross pay by their employer and given to the government. This is to ensure that is is paid in full and is much better than relying on the employee to work out their own tax and pay it to the government at the end of the year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is a payslip?

A

A payslip is given by the employer to the employee showing details of the pay earned and the amount deducted.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

When do employees get given their payslip

A

Employers must give employees payslips at the time, or just before, they are paid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What must a payslip contain?

A
  • the gross amount of the earnings before deductions
  • the reason for, and the amounts of, all deductions
  • the net amount of the earnings
  • an explanation of how the earnings are paid.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What does the government use National Insurance to pay for?

A

The government uses funds from National Insurance to pay for things such as Jobseeker’s Allowance and State Pension.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How is National Insurance worked out?

A

National Insurance is worked out based on your weekly pay and it depends on how much you earn and whether you are employed or self-employed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are National Insurance numbers made up of?

A

National Insurance numbers are made up of 2 letters followed by 6 numbers and 1 letter.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Who must you give your National Insurance number to?

A
  • HMRC
  • your employer
  • Student Loan Company - if applying for a student loan
  • the government department that is involved if you claim any benefits
  • a bank if you open an individual savings account
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What do most employees pay?

A

Most employees pay “class 1” contributions, the 2013-2014 rate of which is 12% if your weekly earnings are between £149 and £797.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

How is the amount of tax you have to pay calculated?

A

The amount of tax is calculated as a percentage of your income and the more you earn, the more tax you will need to pay.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What do taxpayers receive?

A

Tax payers receive a personal allowance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a personal allowance?

A

A personal allowance is the amount of taxable income that they are allowed to earn or receive each year tax-free.

22
Q

What is income tax only due on?

A

Income tax is due only on income that is above your tax-free allowance.

23
Q

What is a tax band?

A

The actual tax paid is worked out as a percentage of the taxable income and the government called this a tax band.

24
Q

What is the basic rate band?

A

For taxable income below £32,010, the rate of tax is 20%.

25
Q

What is the higher rate band?

A

For taxable income between £32,011 and £150,00, the rate of tax is 40%.

26
Q

What is the additional rate band?

A

For taxable income above £150,000, the rate of tax is 45%.

27
Q

What do you pay tax for? (income related)

A

You do not pay tax at the highest rate of your income, only for that part of your income which is in the higher bands.

28
Q

Why are tax calculations always rounded down?

A

Tax calculations are always rounded down so that no-one pays more tax than they have to.

29
Q

What does your employer use a tax code for?

A

Your employer uses a tax code to calculate the amount of tax to deduct from your pay.

30
Q

What is the tax code made up of and give an example.

A

The tax code is made up of several numbers and a letter.

example: 944L = £9,440

31
Q

What does multiplying tax codes by 10 tell the employer?

A

When the tax code numbers are multiplied by 10, this tells the employer how much is tax-free and so the employer can work out the taxable pay.

32
Q

Who uses tax codes and what for?

A

Tax codes are used by HMRC to collect tax that may not have been paid in previous years.

33
Q

What is overtime?

A

Overtime is the amount of time that someone works beyond normal working hours.

34
Q

What will some businesses pay on if you work on a bank holiday?

A

Some businesses will pay double time if you work at a bank holiday.

35
Q

What does SSP stand for?

A

Statutory Sick Pay.

36
Q

What is SSP?

A

If you are ill and cannot work, the government will pay you sick pay, which is actually paid by your employer on behalf of the government.

37
Q

What are the basic principles for which SSP will be paid to you for:

A
  • if you are sick for at least 4 days in a row
  • if you are earning at least £109 a week
  • if you have told your employer that you are sick
38
Q

What will your employer pay to you for SSP?

A

Your employer will pay SSP at the current rate of £86.70 each week.

39
Q

What are student loans?

A

Student loans are part of the financial support package that the government provides for students who usually take out this type of loan for college or university.

40
Q

When do students start making repayments to the government?

A

Students start making repayment to the government only when they earn more than £21,000 a year.

41
Q

How are the repayments made?

A

Their employer takes the repayments out of their wages in the same way that it deducts income tax and NI. This repayment is made out of the employee’s gross pay and is paid to the government through PAYE.

42
Q

Why was the National Minimum wage introduced?

A

The National Minimum Wage was introduced to make sure that employees are not forced to work for low and unfair rate of pay because they are desperate to work or too scared to complain about their pay.

43
Q

What is the minimum pay for people between 16 and 17?

A

until 30th September: £3.68

from 1st October : £3.72

44
Q

What it the minimum pay for people between 18 and 20?

A

until 30th September: £4.98

from 1st October: £5.03

45
Q

What it the minimum pay for people 21 and over?

A

until 30th September: £6.19

from 1st October: £6.31

46
Q

What it the P45 and the P60?

A

The P45 and the P60 are 2 common tax documents that must, by law, be given to you.

47
Q

When is the P45 used and what is it?

A

The P45 is used when you stop working for an employer. It is the record of the taxable income that you have earned during the tax year, and the amount of tax and national insurance that you have paid.

48
Q

What happens with regard to your tax if you start a new job?

A

If you start a new job, you should immediately give our P45 to your new employer. If you do so, your tax payments will continue and be calculated using the tax code on the P45.

49
Q

What is the P60 and what does it tell you?

A

The P60 is the summary of your pay and the tax that has been deducted from it in the tax year. Your employer should give you a P60 to keep as a record at the end of every tax year. It will tell you the total taxable earnings for the year, and the total tax and national insurance that you have paid. It will also tell you the tax ode and so you could use this information to check your tax paid.

50
Q

How do self-employed people pay tax?

A

Self-employed people fill in a tax return at the end of the tax year and calculate how much tax and national insurance they owe. They then pay the tax and national insurance to HMRC.

51
Q

What is a self-assessment?

A

A self-assessment involves completing an online or paper tax return in order to tell HMRC about your income.

52
Q

Why do people need to complete a self-assessment?

A

People need to complete a self-assessment form if they have more complicated tax affairs or have earnings that are not taxed through PAYE.

IFC Finance Course (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions