Unit 1 Topic 12 Flashcards
Define ‘gross interest’
Interest paid without tax deducted.
What’s the National living wage?
The minimum that people aged 23 and over must be paid per hour by law. The national minimum wage applies to workers aged under 23.
What’s the National minimum wage?
The minimum pay per hour to which workers are entitled by law. The rate depends on a worker’s age and whether they are an apprentice. It applies to workers aged under 23. Workers aged 23 and over are entitled to the national living wage.
What’s a P45?
A document legally required from an employer when an employee stops working for them. It summaries the employee’s tax and National Insurance details for their next employer.
What’s a P60?
A document prepared at the end of every tax year to show all the income tax and National Insurance contributions paid by an individual during the preceding 12 months.
What’s self-assessment?
A method used, often by self-employed people, to calculate the amount of tax and National Insurance they need to pay.
Define ‘self-employment’
Earning an income by selling your goods or services directly to a consumer, rather than being employed by somebody else and being paid a wage or salary.
What is taxable income?
Income on which tax must be paid- that is, after deducting allowance and any permitted expenses from the total income earned.
What’s a tax band?
A category of income on which a specific rate of tax is payable.
What’s a tax code?
A code used by a person’s employer or pension provider to calculate the tax to deduct from pay or pension.
What’s tax paid at source?
Tax deducted by the provider (on behalf of the government) from interest earned on savings. From April 2016, providers no longer deduct income tax from savings interest at source.
What’s a tax return?
A tax form completed by people in certain situations. It sets out details of income and expenditure and allows the taxpayers or HMRC to calculate the amount of tax and NI contributes owed.
What’s a zero-hour contract?
A type of employment contract that doesn’t set out a fixed number of hours than an employee must work and be paid for. The employer is not obliged to provide work nor the employee to take work offered.
What are income tax and national insurance contributions used by the government for?
To pay for essential services such as the NHS, education, police and defence.
NI in particular is used to pay for benefits that working people will use themselves, such as the state pension and for benefits for others such as the unemployed.
What act introduced National Minimum wage?
The National Minimum Wage Act (1998)
