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 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.