Topic 12 - Earnings Flashcards

1
Q

What must everyone who works pay?

A
  • income tax
  • NI contributions
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2
Q

What does income tax + NI contributions go towards?

A
  • gov. to spend on health + pensions etc.
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3
Q

What does NMW stand for?

A

National minimum wage

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4
Q

What is the NMW?

A
  • lowest hourly wage an employee can be paid
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5
Q

What are some exceptions to the NMW?

A
  • voluntary workers
  • ppl on work experience who aren’t trainees (interns)
  • trainees on some gov. schemes
  • prisoners
  • members of armed forces
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6
Q

What is the max hours an employer can work?

A
  • 48hrs per week
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7
Q

What working time regulations are employees entitled to?

A
  • at least 11 consecutive hours’ rest
  • I day off a week
  • 20min break if working day > 6hrs
  • if working 5 days/week = 5.6 weeks paid holiday
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8
Q

Working time regulations don’t apply to

A
  • armed forces
  • emergency services
  • domestic workers in private households
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9
Q

How is income tax paid?

A
  • according to how much an individuals income is
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10
Q

What is a personal allowance?

A
  • income an individual receives before paying income tax
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11
Q

What does a tax code tell u?

A
  • how much u can earn before paying income tax
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12
Q

What is a personal savings allowance?

A
  • taxpayers earn certain amounts in savings interest tax free
  • basic rate = £1,000
  • higher rate = £500
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13
Q

Who doesn’t have to pay NI contributions?

A
  • young apprentices
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14
Q

What does the amount of NI contributions depend on?

A
  • employment status + income
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15
Q

How are workers income tax + NI paid?

A
  • by employer to HMRC through PAYE scheme
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16
Q

What are the 2 types of NI ppl self-employed can pay?

A
  • class 2
  • class 4
17
Q

What are the 3 diff. PAYE documents?

A
  • payslip
  • P60
  • P45
18
Q

What does P60 show?

A
  • all paid income tax + NI contributions at end of financial yr
19
Q

What does P45 do?

A
  • issued when employee leaves + provides summary of NI + income tax paid
20
Q

What is a payslip?

A
  • shows earnings before + after deductions
21
Q

What does a P45 do?

A
  • allows new employer to calculate how much income tax + NI to pay
22
Q

What does the P45 show?

A

Employee’s:
- tax code + PAYE
- NI number
- leaving date
- earnings in tax yr so far
- income tax paid in tax yr

23
Q

Why might some ppl need to complete a tax return?

A
  • to tell HMRC about their earned + unearned income
  • e.g. ppl paying Xtra income tax on savings interest/self employed