De­duc­ing the de­duc­tions that are taken from your pay

Gloucestershire Echo - - CASHING IN -

QMY SON has left school and is tak­ing an ap­pren­tice­ship. Could you ex­plain to him about his payslip?

ASO, YOU’VE left school and you’re look­ing to start your ap­pren­tice­ship! Wel­come to the world of work, it’s ex­cit­ing, new and there is so much to learn.

When you re­ceive your pay you may see some un­ex­pected de­duc­tions in your payslip. These could in­clude in­come tax and na­tional in­surance, which are de­duc­tions made by the gov­ern­ment to run the coun­try.

You are able to earn £1,041 per month with­out pay­ing in­come tax, but if you earn more than £719pm you will pay na­tional in­surance, a tax by a dif­fer­ent name.

This is charged at 12% of your in­come be­tween £719pm and £4,168pm (if you’re that lucky!). Earn­ings over this, will at­tract na­tional in­surance at 2%.

You may have heard that the gov­ern­ment cut na­tional in­surance for ap­pren­tices un­der 25, from April 2016. This is true, but only ap­plies to the em­ploy­ers’ na­tional in­surance pay­ments, not yours.

Now you’re earn­ing, you may spend more than you pre­vi­ously did, so it’s im­por­tant you man­age your money cor­rectly or you will eas­ily get your­self into debt.

I want you to save 12.5% of your in­come, this is the same as you sav­ing the first work­ing hour of an eight-hour day. When you go into work, this first hour you save for your fu­ture, then the next cou­ple of hours may be for your tax, then by lunch time it’s to cover your other bills.

If you’re un­der the age of 22, you may not be au­to­mat­i­cally en­rolled into your em­ployer’s work­place pen­sion scheme along with your older col­leagues.

But pro­vided you earn £511.33pm you have the right to opt in to the scheme. If you do, your em­ployer will have to con­trib­ute to your pen­sion in the same way as for any­one who’s been au­to­mat­i­cally en­rolled.

If you earn less than £511.33pm your em­ployer has to give you ac­cess to a pen­sion to save into if you ask them, but they’re not re­quired to con­trib­ute to it.

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