Understanding Pay Guide

This is the source of more confusion among first-time workers than anything else.

When an employer offers £25,000, that's gross. Actual take-home will be roughly £20,700 after tax and NI. Always think in net terms when budgeting.

Your employer is legally required to give you a payslip on or before every pay date. Here's what each term means:

You only pay tax on earnings above your Personal Allowance — most part-time student workers pay very little or none at all.

Example: earning £18,000/year — £12,570 is tax-free, leaving £5,430 taxable at 20% = £1,086/year, or £90.50/month less on your payslip.

Separate from income tax — funds the NHS, state pension and other benefits. Your contributions build a record that affects future entitlement.

A student working 15 hours/week at the National Minimum Wage earns roughly £8,800/year — well below the threshold, so NI contributions are typically zero.

Your legal right. No employer can pay you less than this, whoever they are.

Working time includes mandatory training and time your employer requires you to be available. Your employer cannot deduct uniform costs if it takes your pay below the minimum wage.

When you start a new job, you'll complete a Starter Checklist (previously P46) so HMRC sets the right tax code — getting this right avoids an emergency tax code.

• Statement A — this is your first job since 6 April and you haven't received taxable benefits since then. Most first-time workers choose this.
• Statement B — this is your only job but you've had another since 6 April, or received taxable benefits.
• Statement C — you have another job, or a state/works/private pension.

When you leave a job, your employer gives you a P45 showing earnings and tax paid — hand it to your new employer. No P45 (e.g. first ever job)? Just complete the Starter Checklist instead. Keep your P60 (end-of-year summary) safely — you may need it for tax returns or mortgage applications later.

Most pay problems are simple errors that can be fixed quickly once you know how to spot them.

• Paid the wrong amount? Check against contracted hours and rate, then raise it with your employer in writing.
• No payslip? Your employer must give you one by law — ask in writing; escalate to an employment tribunal if refused.
• Too much tax taken? Likely a wrong or emergency tax code — contact HMRC to correct it; overpayment is refunded.
• Paid below minimum wage? Report to HMRC's National Minimum Wage team (0300 123 1100) — you can do this anonymously.
• Don't know your NI number? Check old payslips or P60s, or call HMRC on 0300 200 3500.
• Paid cash with no payslip? This is illegal and leaves no NI record, affecting your future state pension. Seek advice from ACAS.

Will I definitely pay no tax on a part-time job? If your total income across the tax year stays under £12,570, yes — but if you have more than one job, the allowance is usually only applied to one of them, so check your tax code on each.

Does the calculator above account for a second job? No — it assumes this is your only income and the full Personal Allowance applies. A second job is typically taxed at Basic Rate (code BR) from the first pound.

Do I pay tax on tips? Cash tips given directly to you are generally not taxed at source, but tips distributed by your employer usually go through payroll and are taxed as normal income.

What's the difference between an apprentice rate and my age-band rate? If you're an apprentice aged 19+ and past the first year of your apprenticeship, you move to your normal age-band rate, not the apprentice rate.