Pay, Contracts, Tax and Leave

Your Pay

Salaries and wages vary with each sector, employer and the level you are at.

However, the National Living Wage is £7.50 an hour (the rates change every April). This means anyone aged 25 or over is legally entitled to at least £7.50 an hour.

For those under 25, the National Minimum Wage applies (this is the minimum you will be paid, you might be paid more)

National Minimum Wage
Apprentice: £3.50 / hour
Under 18: £4.05 / hour
Age 18 to 20: £5.60 / hour
Age 21 to 24: £7.05 / hour

National Living Wage
Age 25 and over: £7.50 / hour

There is also a real Living Wage which businesses can voluntarily sign up to. This is independently calculated each year based on what employees and their families need to live. The London Living Wage is £9.75 per hour and around 1,000 London businesses have committed to paying this.

Contracts

There are various types of contracts:

Temporary: You are either given an end date for your employment or it may, for example, be judged on a week by week basis

Temp to Perm: You initially start on a more flexible (temporary) contract, with the possibility of it becoming an ongoing (permanent) position

Fixed Term: You are given an end date for your employment

Permanent: Ongoing job, with employee benefits

Full-time: Standard number of working hours around 37-40 hours per week, no more than 48 hours per week. Click here and here for further details.

Part-time: Reduced number of working hours compared to the standard (full-time) working week

Internship: Fixed term employment with the intention for the employee to improve their skills and experience

Apprenticeship: Fixed term employment with an element of studying

Zero hours: No promised number of hours, could vary from week to week, depending on the needs of the employer

Income Tax

Income from employment is taxed, the amount taxed depends on how much you earn.

The standard Personal Allowance is £11,500. This means that you are not taxed on £11,500 of your annual wages or if you earn under this amount, you are not taxed at all.

You will be allocated a tax code when you start your employment.

Quite often an emergency tax code is given, which could mean you are paying a lot more tax than you should be, this might automatically be adjusted or you may need to contact the HMRC

Your income tax will automatically be deducted from your pay and shown on your pay slip.

Useful links:

  • Income tax overview
  • Use the Income Tax Calculator on this link to see approximately how much tax you will pay www.moneysavingexpert.com/tax-calculator
  • If you wear a uniform at work and have to wash, repair or replace it yourself you may be able to reclaim tax for expenses
  • Tax relief for employees (where you may be able to claim some tax back)
  • Freelancing and Self-employed: You must declare any earnings. Please click here for information on completing tax returns and National Insurance.

Different types of tax forms

P60: This is an annual form you receive at the end of a tax year to show the amount of tax you paid on your salary during the whole tax year (6 April to 5 April).

P45: You will receive a P45 from your employer when you stop working for them. It will show how much tax you have paid on your salary so far within the tax year (6 April to 5 April). You will need this if you return to your country of origin, to prove you have been working overseas.

Pension Laws

Most employers already offer a pension (retirement) scheme but by 2018 all employers will be required to do so by law. A percentage of your pay goes into the scheme and the employer also pays a contribution. There are rules to whether you are automatically enrolled onto this scheme or not and how to opt out, click here for details.

Annual Leave

Employers vary in the number of days paid holiday (also known as ‘leave’) they give and it also depends on the type of contract you have. Click here to find out what you are entitled to.

Maternity / Paternity pay

If you are having a baby you may be entitled to maternity/paternity pay and leave.

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