Starting Work? What You Need to Know About
Starting work is one of the most exciting things you’ll ever do. But there is lots to know about, especially regarding payslips and wage deductions. Find out what you need to know here.If you’re just starting out in your working life and have secured your first paid employment then congratulations! It’s important to understand that there are some important issues you should know. We take a look at things you need to know about.
Deductions From Your Salary
It may come as a shock but as an employee, you will almost certainly not receive your full salary. This isn’t unusual. You will have deductions taken away from your wage whether weekly, fortnightly or monthly.
Deduction may take the following forms
Tax and National Insurance
As a UK employee, you pay Income Tax to Her Majesty’s Revenue and Customs (HMRC) through the PAYE system (Pay As You Earn). The amount you pay will be determined by your salary and circumstances. It will be signified by your tax code which is displayed on your wage slip. The current tax code for most full time employees is 1060l which indicates you are allowed to earn £10,600 tax-free, with all income above this taxed. The yearly tax allowance may change every year as may your tax code. The tax you pay is used by the government to fund a whole host of things..
National Insurance
You will also pay National Insurance out of your wages if you earn more than £155 per week. This is paid to qualify you for certain state benefits should you ever need them.
The rate is 12% of your weekly earnings between £155 and £815, and 2% of your weekly earnings above £815. If you have queries about your tax or National Insurance your first port of call should be your employer’s payroll department and then Her Majesty’s Revenue and Customs.
Student Loan Deductions
If you:
- Have been a student in the UK you may have taken out a student loan from The Student Loans Company
- Started studying before September 1 2012, repayments begin as soon as you start to earn over £17,335 per year
- Started studying after this date, repayment s begin when you start to earn over £21,000. All of this is done automatically, you do not need to notify your employer
The Importance of Understanding Your Payslip
All of these deductions should be detailed clearly on your payslip. Your payslip will show the income you have earned and all of the deductions and should also give you a running total of your earnings for the year and what you have paid to date in terms of National Insurance and tax.
The payslip may be sent to you in the post, handed to you at work or emailed. It is important that you keep a copy. If there is anything about the payslip that you do not understand then you should contact your payroll department who should be able to explain any issues to you.
