One of the benefits of having a job is getting paid.

Once you start work your employers will confirm how you will be paid and how often. For example, every four weeks or on the last day of the month. Your first wage may be paid in arrears. This means you will have to work for a week or month before you get your first pay.

Once you earn a certain amount you will start to pay taxes and this can be confusing.

Below you will find information that will help you understand more about pay and taxes.

If you start a job and are over 16 you will be entitled to the National Minimum Wage. There are different minimum wage rates for different groups of workers.

To find out the current minimum wage rates visit the gov.uk website.

In almost all jobs you will be given a payslip which sets out your earnings and deductions. This slip will contain:

  • Gross wages - this is the total you have earned before deductions.
  • Fixed deductions - things you pay out such as Union Subscriptions.
  • Variable deductions - payments for Income Tax or National Insurance - which are based on your earnings.
  • Net wage - the amount that will be paid to you after deductions.

The Pay As You Earn (PAYE) system is a method of paying income tax and national insurance contributions. Your employer deducts tax and National Insurance contributions from your wages or occupational pension before paying you your wages or pension and passes this on to HM Revenue and Customs.

When starting your first job your employer should give you a tax form P46 to complete. Your employer uses this to tell the tax office that you have started work.

You will have a tax allowance that is an amount you earn before you pay tax; your allowance will depend on your personal circumstances.

You can check your tax allowance on the gov.uk income tax web page.

Your employer should give you an annual P60 to show how much tax and National Insurance you have paid during the previous financial year.

National Insurance is a scheme in which employees make contributions from their earnings to build up entitlement to certain state benefits, such as unemployment, sickness, maternity and retirement.

  • Some of your contribution goes towards the cost of the National Health Service (NHS).

Find out more on the gov.uk National Insurance web page.

Some employers may offer to pay 'Cash-In-Hand'.

In these cases, you will probably not receive a pay statement and it is likely that your employer is not paying tax or National Insurance on your behalf.

It is important that you check that your tax and National Insurance is being paid otherwise you may have helped your employer to break the law!

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