Congratulations on finding employment! This is a short toolkit designed to help you understand the basics of paid work.
National Minimum Wage and Pay
For the most up-to-date National Minimum Wage for your age group, visit www.gov.uk/national-minimum-wage-rates
Normally on or before your first day of employment, you will be asked to complete a number of forms; one will be your contract of employment.
All employees have an employment contract with their employer. A contract is an agreement that sets out the following for the employee:
These are called the ‘terms’ of the contract.
Both employees and employers must stick to the terms of the contract until it ends, or until the terms are changed (usually by agreement between the employee and employer).
An employee can still leave at any point as long as they give the notice period agreed in the contract. Similarly, the employee can be dismissed by the employer at any point for misconduct.
National Insurance contributions build up your entitlement to certain social security benefits, including a State Pension. The amount of National Insurance you pay depends on how much you earn and whether you're employed or self-employed. You stop paying National Insurance contributions when you reach retirement age.
You pay National Insurance contributions if you're an employee or self-employed and you're aged 16 and over, as long as your earnings are more than a certain level.
What is a National Insurance number?
Your National Insurance number is your own unique number that stays the same throughout your life. The number makes sure that the National Insurance contributions and tax you pay are properly recorded on your account. It also acts as a reference number for the whole social security system.
Every National Insurance number is different. It's made up of letters and number, and will look similar to this example: QQ 12 34 56 A (Please note that this National Insurance number is just an example and should not be used as your own number).
Your National Insurance number never changes even if you go abroad, marry, register as a civil partner, change your name, etc.
How much National Insurance do I pay?
The amount and type of National Insurance contributions you pay depends on whether you're employed or self-employed and how much you earn.
The rates for those of you employed by a company are shown below for the 2014-15 tax year.
You can find full information at www.hmrc.gov.uk/rates/nic.htm
What if I dont have a National Insurance Number?
If you don’t already have a National Insurance Number, you can obtain one by calling 0845 6000 643.
Income Tax - the basics
As well as paying National Insurance contributions, you'll also have to pay Income Tax on your earnings. Income Tax is a tax on the money you earn. However, you will only be taxed on 'taxable income' above a certain level.
Each year the government sets a tax allowance that changes each April – the current (2014/2015) tax allowance is £10,000. Any money earned over this amount will be subject to tax.
You can find out the annual changes to income tax allowances at www.hmrc.gov.uk.
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