Tax Facts: Starting your first job


Well done, you’ve got that job! It could be your first job, a summer holiday
job, or a Saturday job, Whichever it is, it’s great news. Your first step into the world of work
and some welcome cash. There are lots of things to think about. Have I got the right clothes? The right equipment? My best smile? Will I need to pay tax? What? Seriously? Tax? YES! Once you start work, there are lots of things
you need to think about And tax is definitely one of them. Will I have to pay tax on everything? NO! You only pay tax when the amount you earn
reaches a certain level. So…. now that you have a job, you need to make
sure that HM Revenue & Customs – often known as HMRC – has the right information to calculate
if you do need to pay tax. This is really important, because the government
uses this money to: • save and improve people’s lives through
the health service • fight crime and defend our country
• build schools and colleges, and pay your teachers’ salaries
• tackle poverty by paying benefits to people who need them, and
• support older people by paying them a pension. Okay…so what do you need to know about tax
to get started? Well, each tax year
that’s 6th April one year to 5th April the following year (yeah, weird, we know)
you’re allowed to earn a certain amount of money without having to pay tax. This is called your Personal Allowance. You can find out how much it is by doing a
quick internet search for, ‘HMRC personal allowance’ When you start your new job – and before
your first payday – your new boss might ask you for some information, so they can tell
HMRC that you’ve started work. One of the things your employer will need
to know is your National Insurance number, which is sent to you automatically by HMRC,
just before your 16th birthday. And it stays with you throughout your life. It’s a unique number – you can think of it
as your personal code. It’s important, because National Insurance
Contributions entitle you to certain benefits, including (in a few decades’ time) your
pension. Your employer will automatically make National
Insurance deductions from your salary or wages once you’re 16 but, as with tax, this won’t
happen until you’ve earned a certain amount. You’ll also need your National Insurance
number if, in the future, you apply for a student loan. But what if you can’t find your National
Insurance number? Don’t panic. The GOV.UK website will tell you how to apply
to HMRC to get another copy. So, there you are in your new job waiting
for your first pay slip. When it comes, you should check it carefully
as it will show you how much you’ve been paid, and also what’s been deducted. There’s lots of important information on
a pay slip, so it’s worth taking a close look to make sure you understand what everything
means. And it’s also probably worth keeping those
payslips somewhere safe, in case you need them later on. It feels good, earning all that cash but how
will you know if you are paying the right amount of tax? Well, let’s look at three situations you
could find yourself in. This is the technical bit so you’ll need
to concentrate. ATTENTION PLEASE! Situation 1 – You’ve got an ongoing job
– maybe it’s a Saturday job. Soon after you start work, HMRC will send
you a tax code. This tax code says what your Personal Allowance
is, so you know how much of what you earn will be tax free. Your employer will use your tax code to work
out when you should start paying tax and how much you need to pay. And if you pay too much tax, your tax code
will be used to make adjustments – so you get the money back. Situation 2 – You’ve got a temporary job
– maybe something to give you a bit of extra money during the summer holidays. You might find that tax is being automatically
deducted from your wages, even if you don’t think you’re earning enough to pay tax. Don’t worry. When you finish your job, your employer will
give you a form, called a P45, showing the tax you’ve paid. You can use this to contact HMRC to see if
you’re due a refund – which could mean that some or all of the tax is paid back to
you. Finally, situation 3 – You’ve have several
different jobs during the year. If that’s the case, at the end of the tax
year – that magic date of 5 April again – HMRC will automatically add up all your
earnings, work out if you should have paid tax and make any adjustments that are be needed. If you’re ever worried you might have paid
too much tax – or too little – you can always download HMRC’s free tax calculator app, for an estimate of how much tax you should have paid. Or you can contact HMRC direct. And one last thing, if HMRC needs to contact
you – and that could be to let you know about a tax refund – it’s important it
has the right address. Your employer won’t tell HMRC that you’ve
moved – nor will anyone else – you need to do that yourself! So, this has probably given you a lot to think
about. We know your time is valuable and you’ve
got lots of things to do that are even more interesting than thinking about tax. That’s why it’s important – and simpler
for you – if you can get your tax affairs right the first time. It’s your money after all! In fact, why don’t you go and find your
National Insurance number today, so you have it when you need it And good luck with that job by the way
We’re sure you’ll be great!

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