7366976
Description
Flashcards by Brittany Jacques, updated more than 1 year ago
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Created by Brittany Jacques
over 7 years ago
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| Question | Answer |
| Topic 12 - Financial Studies | ... |
| Why has legislation / regulation about minimum wage and maximum working hours been introduced? | to protect employees who may have been exploited by the employers |
| What do people who work have to pay? | - income tax - national insurance contribution |
| What do the government use tax and NI contributions for? | - National Health Service (NHS) - Education - Police - Defence - State pension - Benefits for unemployed |
| Other than earnings from work, what is income tax paid for? | - interest on savings - dividends |
| Who sets the amount of tax and NI contribution? | Chancellor of the Exchequer |
| How often is the amount of tax / NI changed? | every tax year |
| When does the tax year run? | From 6th of April to the 5th of April in the following year |
| What happens to people who work or receive income from unearned sources if they pay too little NI / tax | penalties like: - fines extreme cases: - prison sentences |
| What happens if someone pays too much tax / NI | They can claim additional amounts back |
| What is a tax rebate? | when somebody pays too much for NI / tax and they can claim those additional amounts back |
| What act introduced the national minimum wage? (NMW) | National Minimum Wage Act 1998 |
| What function does the low pay commission do? | advises the government what the minimum wage should be each year |
| What is the national minimum wage expressed as? | per hour |
| What dates does the NMW apply to? | 1st October - 30th September in the following year |
| What age does a person have to be to get minimum wage? | school leaving age defined as 'the last Friday of June in the school year when they had their 16th birthday |
| What is the NMW for someone 25+ | £7.20 |
| What is the NMW for someone aged 21-24 | £6.95 |
| What is the NMW for someone aged 18-20 | £5.50 |
| What is the NMW for someone under 18 | £4.00 |
| What is the NMW for apprentices under 19 or in the first year | £3.40 |
| Are contracts that specify a wage below the minimum wage legally binding? | No |
| What exceptions are there to the NMW? | - voluntary work - people on work experience (interns) - trainees on government schemes - prisoners - members of the armed forces |
| What can workers entitled to minimum wage that aren't receiving it do? | - examine employees records and claim missing wages - take employers to industrial tribunal |
| What does the government offer to workers who are in dispute with their employer | Confidential Helpline |
| Are people on a zero hour contract entitled to NMW? | Yes |
| When are people on zero hour contract entitled to the NMW | When they come on call at the employers premises |
| Is it illegal for employers to not pay the NMW when workers on zero hour contracts are working on site | No it is illegal, they must pay them the NMW |
| In what year was the Working Time Regulations introduced? | 1998 |
| What did the Working Time Regulations 1998 specify? | - work max 48 hours pw (17 weeks unless chose otherwise) - 5 days = 5.6 weeks' paid holiday per year (bank holiday can be included up to employee) - 3 days = 16.8 days per annum - entitled to at least 11 consecutive hours' rest in 24 hour period - when longer than 6 hours entitled to minimum 20 min rest - entitled to at least one day off each week |
| Who do the regulations not apply to? | - armed forces - emergency services - domestic workers in private households e.g. nannies - when 24 hours staffing required |
| Where is the working hours, annual leave and rest period set out? | Employees Contract of Employment |
| When do people have to pay income tax and NI contribution? | when they earn more than the minimum person allowance (11,000) |
| What determines whether a person pays income tax? | the amount of money they earn |
| When was the income tax introduced and why? | in 1799 to raise money to fight napoleon |
| Which is the most recent income tax act? | Income Tax Act 2007 |
| What is personal allowance and who does it apply to? | a certain amount of money that people can earn before they pay income tax and it applies to most people |
| Exceptions to personal allowance | - people born before 6 April 1938 - blind people - married couples where one partner was born before April 1935 |
| How to calculate how much income tax a person owes | - subtract personal allowance from gross annual income = taxable income - work of which tax band applies to taxable income - calculate using tax rates from each band |
| What are the income tax rate bands? | 20% = £0-£32k 40% = £32k-£150k 45% = 150k+ |
| What personal savings allowance did the government introduce? | £1,000 for basic-rate tax payers £500 for higher-rate tax payers |
| What else do you need to pay income tax on? | savings account |
| When don't people pay income tax on savings interest? | when taxable income is less than £5,000 |
| Do basic-rate taxpayers have a personal savings allowance? | Yes of £1,000 |
| What is the higher-rate taxpayers personal savings allowance? | £500 |
| What are Individual Savings Accounts? (ISAs) | Tax-free accounts, so interest earned on a cash ISA is paid to savers in full and they do not owe any income tax on it, regardless of how much they earn elsewhere |
| Who pays NI contributions | - between 16 - state pension age - earning more than £155 per week - self-employed & making profit over £5,965 |
| Are young apprentices required to pay NI contributions? | no |
| When do you get NI number? | 16 |
| How does the number of years a person has paid NI impact state benefits they can get | Jobseekers Allowance Maternity Allowance Bereavement Benefits |
| How many years do you have to pay NI to be eligible for full state pension? | 30 years |
| Who does this disadvantage? | - carers - self-employed (low income) |
| In a new state pension how many years do people have to pay ni contributions? | 10 |
| How much state pension is received per week? | At least £148.40 |
| What are the class 1, 2 and 4 contributions | Class 1: 12% between £155-£815 and 2% on earnings over £827 per week Self-employed: Class 2: flat rate of 2.80 per week Class 4: 9% on annual taxable profits between £8060 and £43,000 and 2% on profits above that |
| Who are NI contributions and Income Tax paid to? | Her Majesty's Revenue and Customs (HMRC) |
| How are they paid to HMRC? | through Pay As You Earn (PAYE) scheme |
| How do self-employed pay NI and Income Tax? | Themselves, through a system called self-assessment |
| What does the self-assessment involve? | completing income tax forms called tax returns, every year once a year. They pay the flat rate Class 2 contributions throughout the year (often direct debit) |
| Under what Act must employers provide employees with details about income tax and NI paid on wages? | Employment Rights Act 1996 |
| What are the three documents involved in PAYE? | - Payslip - p60 (shows how much tax and NI was deducted from annual salary) - p45 (when employee leaves, details for their new employer) |
| What does a payslip show? | earnings before and after deductions shows how wages are paid |
| How are payslips provided? | paper or electronically. Most use payroll software to generate them |
| How do employers work out how much tax to deduct from employees earnings? | Tax Code: which shows individuals personal allowance and is provided by HMRC |
| What is the format of a payslip? What is a common tax code? | 3 numbers and 1 letter 1060L |
| When does an employer have to issue a P60? | at the end of the tax year on the 5th of April |
| What is the P60? | It summaries the tax paid by the employer for the tax year that just ended. It is provided on paper or electronically |
| What do employees use P60 for? | to prove how much they earned and how much tax and NI was deducted from their salary |
| What might they need a p60 for? | - to complete a self-assessment tax return - claim back overpaid income tax or NI contributions - apply for tax credits - apply for a loan or a mortgage |
| Why should people fill in an income tax return? | to tell HMRC about their earned and unearned income? |
| What does a tax return cover and how can it be completed? | income received in one tax year and it can be completed on paper or online at HMRC online services website |
| Who calculates tax returns? | HMRC |
| What are the deadlines for when HMRC must receive a completed tax return | - paper tax returns must be received at midnight on the following 31 October - Online tax returns must be received by midnight on the following 31 January - The final payment of tax due must be received by midnight on 31 January |
| What are the penalties for missing the deadline for submitting a completed tax return? | One day late: fixed penalty £100. Three Months Late: £10 for each following day up to a 90 day maximum of £900 6-12 months: £300 or 5% tax due (whichever higher) 12 months: serious up to 100% tax due, as well as £1,000 |
| How long should people keep their records? | at least 22 months after end of the year tax |
| What must self-employed people do? | as well as completing tax returns and paying what they owe on time, they need to make payments of income tax 'out account' meaning they make advance payments of tax they owe for the next tax return on 31 Jan and 31 July |
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