Working in the UK
Pay & Benefits
In addition to fair pay, many UK employees enjoy a range of benefits: performance related pay links your salary to your individual performance, that of your team, of the business as a whole or all of the above. It can be given as an alternative to, or as well as, an annual bonus, with the amount dependent on the type and level of work you do.
Flexible benefit schemes enable you to choose perks that suit you. Tax efficient benefits, such as childcare vouchers and salary sacrifice pensions contributions are very popular. Some employers design their own share scheme, but most prefer to make use of favourable tax treatment available through the Inland Revenue (Save As You Earn).
Permanent Health Insurance covers you and in some cases your family, in the event of long term illness or death. Wellness perks include gym membership and health screening.
Tax
You pay Income Tax on: your wages if you're employed; the profits from your business if you're self-employed; interest on savings; income from shares; rental income; money paid from a trust. Not all income is taxable and you 're only taxed on income above a certain level.
Everyone who is resident in the UK for tax purposes has a 'personal allowance ' which is the amount of income they can earn or receive each year tax-free. This tax year (2008-2009) the allowance is £5,435. After this the amount of tax you pay is calculated accordingly:
20% on income up to £36,000 and 40% on income over £36,001.
Your employer is responsible for deducting tax and National Insurance from your salary before you receive it. This system is called Pay As You Earn (PAYE). Each payday, your employer should give you a pay-slip. It's a receipt for the tax you've paid, showing details of your earnings before tax (your gross pay), Income Tax and National Insurance Contributions (NICs).
You pay National Insurance contributions (NICs) to build up your entitlement to certain social security benefits, including the State Pension. The type and level of NIC you pay depends on how much you earn and whether you're employed or self employed.
Your National Insurance number (NI number) is your own personal account number. The number ensures that the National Insurance contributions and tax you pay are properly recorded on your account. It also acts as a reference number for the whole social security system.
If you don't already have a NI number you must apply for one as soon as you start work. Telephone the Helpline on 0845 600 0643.
