How you get paid at work

The money you get paid for work can be calculated in a number of different ways by your employer.

The National Minimum Wage is the minimum pay per hour that any worker should get. If you’re over 25, this is called the National Living Wage.

The amount varies, depending on your age and whether you’re doing an apprenticeship.

To check you’re getting the right minimum wage, use the calculator on the GOV.UK website

Some employers might pay you in cash. But mostly, wages are paid into your bank account.

Unless you’re self-employed, you’ll probably be enrolled in a scheme called Pay As You Earn (PAYE).

This means Income Tax and National Insurance, as well as other deductions for student loans or workplace pension, will be taken away before it’s sent to your bank account.

The amount you pay in tax and National Insurance is determined by the tax code, which you can find on your payslip. To make sure you’re being paid the right amount, it’s important to make sure you’re on the correct tax code.

When and how often you get paid is usually agreed between you and your employer before you start the job.

Although wages are usually paid monthly, it can be weekly or even daily and should be stated on your employment contract.

If you get money through your job that’s not part of your usual wages, such as an annual bonus or tips from customers, you’ll have to pay tax on this income. You’ll usually have to pay National Insurance too.

• Your annual bonus, if you get one, it’s treated as part of your normal wages. You’ll pay tax and National Insurance on it through PAYE, in the usual way.
• If you get cash tips direct from customers or through a ‘tronc’ system – where tips are pooled and shared between staff members of the pool. You also need to pay tax on these, but not National Insurance. This is if the amount you get in tips doesn’t involve your employer. It’s your responsibility to tell HMRC about these tips. They’ll then give you a new tax code estimating how much you get in tips each pay period –  and you’re taxed on that amount. Find out more about 'troncs' on the GOV.UK website
• If a customer gives you a tip via their bank card when paying for a meal or service, and your employer shares it with you, your employer is responsible for sorting out the tax and National Insurance. If the employer passes such payments to a tronc, the rules above apply and no National Insurance is due.
• A service charge is not the same thing as a tip, because the customer doesn’t choose to pay it. A tip is a payment that’s given freely.

If you’re working and on a low income, you might still be able to claim benefits, including Universal Credit.

Employers might offer other benefits as well as your pay, for example:

• health insurance
• accommodation
• company car
• gym membership.

These are called ‘benefits in kind’. This is because you’re not getting extra cash, but are getting something you would normally have to pay for.

You still have to pay tax on many benefits in kind.

If you’re eligible, your employer must enrol you in a workplace pension scheme.

Your employer will give you information about the scheme.