For people in employment, certain deductions are taken from your gross pay. The main ones are:

  1. National Insurance: Paid to the government to cover illness or absence from work.
  2. Income Tax: A tax collected monthly from your gross pay.
  3. Pensions: Contributions that may be deducted to help build a retirement fund.
  4. Student Loans: Deductions for repayment if you continue into higher education.

National Insurance (NI):

  • Your NI number is a unique personal account number with the government that never changes.
  • It is needed for various applications (starting a job, claiming benefits, taking out a mortgage). Everyone over 16 who earns or has self-employed profits above a certain threshold pays NI.
  • You pay National Insurance contributions to qualify for certain benefits and the State Pension.

Income Tax:

Income Tax is progressive, meaning that as you earn more, you enter higher tax bands and pay a higher rate on the income within those bands.

Student Loans:

  • Money borrowed to pay for university education.
  • Repaid through salary deductions based on how much you earn, not on how much you borrowed.

After deductions, you are let with: Net Pay

  • This is the amount left after all deductions have been made from your gross pay.