When you start work for a family you become an employee. This means that the family you work for must pay tax and National (NI) on your behalf, through a system called PAYE (Pay As You Earn) and provide payslips each time you get paid.
If this is your first job your employer will get you to fill out and sign a new starter form. Once this is done the tax office can send you a code. This will show how much tax needs to be deducted from your pay.
If you’ve had jobs before your previous employer should provide you with a P45 to give to your new employer. This will show a record of your pay and tax deductions. It gives details such as:
- Your tax code and PAYE reference number
- Your leaving date
- Your wages so far in the tax year (6 April to 5 April)
- How much tax has been deducted.
When you start a new job, give two parts of this to your new employer and keep hold of the other one for your own records.
When you get your first payslip, you’ll find a number of things have been deducted from your gross salary. These are usually:
Personal Allowance You don’t pay tax on the first part of your salary. The Personal Allowance amount is set each tax year and may change from year to year. 10% of the Personal Allowance can be transferred between spouses or civil partners as long as neither pays higher rate tax.
National Insurance (NI) You will pay NI if you earn over a certain limit each week and are age 16 or over. You pay NI to qualify for certain benefits such as State Pension.
Pension Under new workplace pension rules all employers have to provide pensions to employees who qualify by the time they reach their ‘staging date’ – the date given to them by The Pensions Regulator. If you’re over 22 and getting paid more than £10,000 (£833 a month or £192 a week) and your employee has reached the staging date, then you should be automatically enrolled. If you earn less than this your employee should still let you know about auto enrolment pensions. You can ask to be enrolled and, if you earn enough, your employee will have to contribute.
Student loan If you’ve got a student loan to repay, that’ll happen automatically through PAYE once you start earning more than the repayment threshold.
Your payslip may also show details of your holiday entitlement and how much you’ve taken. Here’s a handy tool to help you understand your payslip.
If you have any queries about your pay or your payslip then talk to your employer or ask to speak to the person who does the payroll for your employer.