I've Got my First Job.......fill me in ::

Freedom at last. You have left university and have got your first full time job. You finally have some money in your pocket. Unfortunately, becoming a fully fledged member of the 'real' world isn't without its problems. With your new job comes extra responsibilities and commitments. Such as having to pay tax and National Insurance. This page is intended to help you with some of the problematic situations that you may encounter and tell you of what benefits your new job may entitle you to.

TAX Back to top

Tax is the government's way of raising money to spend on the common good. It is spent on services such as education, health and social security. The money comes from various sources, including Value Added Tax (VAT), company profits and people's salaries. It is the last of these that you will be affected by with your new job.

Income Tax You will probably have to pay income tax when you start your first job. A certain amount will be taken from your wage by the government. Only those people who earn less than £4195 a year will be exempt from paying it.

Tax Bands Those of you who earn up to £27,100 a year, will be taxed the basic rate of 23 per cent. Any earnings over this amount will be taxed at the higher rate of 40 per cent.

Pay As You Earn (PAYE) The idea behind PAYE is that you are able to spread your income tax payments throughout the year. As the name suggests you pay tax as you earn it, as opposed to having to pay one large sum.

P46 Back to top

When you start the job, your employer will give you a P46 form to fill in. You should sign and complete this to confirm that this is your first job since you left full-time education. After filling in the form you will then be given your PAYE tax code. The code is normally a number followed by a letter, although it can be the other way around. It is more than likely that your code will be L419. The 'L' indicates that you are entitled to the basic personal allowance for a person under 65. This allowance is £4,195. Anything you earn over this amount will be taxed. The '419' just indicates that your allowance is £4,195. It is then your employer's responsibility to return the form to your local Tax Office.

P45 Back to top

If you claimed Job Seekers Allowance (JSA), or income support before you started this job then you must fill in a P45 form. These can be obtained from your local benefit office. It will ask you about which benefits you had been claiming, and for how long. You should then pass the completed form onto your employer.

Those of you starting work after Employment Training (E.T), or Youth Training (Y.T) will not have to complete a P45. Your employer will ask you to complete a P46. If you were given a P45 after finishing E.T or Y.T then you must give this to your new employer.

BANKS AND BUILDING SOCIETIES Back to top

You must notify the branch where your account is kept that you have started work. The interest that you get on the money in your account will now be taxed.

HOW TO FIND OUT IF YOU HAVE BEEN TAXED TOO MUCH OR TOO LITTLE Back to top

At the end of each tax year, which is the end of March, your employer will give you a P60. This will tell you how much tax you have paid. The Tax Office will also check a copy of the P60, which your employer will give them. If the amount of tax you have paid is too much, or too little, the Tax Office will contact you.

KEEPING A RECORD OF YOUR TAX AFFAIRS Back to top

You must keep records regarding the tax you pay. This is because every few years your Tax Office will send you a tax return form. This is just to check that the personal details they hold on you are still correct. The information that you should be able to give is:

- Tax code

- P60 forms

- Payslips

- P45 (part 1A)

- Details of expenses and benefits (These will be discussed later in this article)

You must also notify your employer if you change your name or address. They will then amend your personal details and inform the Tax Office of the changes.

NATIONAL INSURANCE (N.I.) Back to top

As well as paying income tax from your wages, you must also pay N.I. These contributions go towards the benefits which you may well receive in later life, such as income support and a state pension.

Your N.I. Card and Number Just before your 16th birthday you should have received an N.I. card in the post. This will provide you with your N.I. number, which will actually be a combination of numbers and letters. This number will be unique to you. You must quote it when dealing with the Tax Office. As the number helps to track down your individual details. If you have not yet received a card, yet are over 16, then you must contact your local Tax Office, or the Inland Revenue directly.

How Much N.I. Do You Have to Pay ?

If you earn under £64 a week then you do not have to pay any N.I. However, if you earn over £64 a week then you must pay 2 per cent of the £64 in N.I., and 10 per cent on any amount over £.64. Any earnings over the amount of £485 a week are not subject to N.I. reductions.

Here are some examples of how much N.I. you might be paying :

If you earn £8,000 a year and are paid weekly, you will pay £10.63 a week in N.I.

If you earn £12,000 a year and are paid monthly, you will pay £77.76 a month in N.I.

If you earn £20,000 a year and are paid monthly, you will pay £144.56 a month in N.I.

USEFUL ADDRESSES AND TELEPHONE NUMBERS Back to top

If you have a query regarding the income tax that you pay then the address and phone number of your local Tax Office will be in the phone book. It will be listed under Inland Revenue. It is best to deal with this office as it will be the office that has all the information regarding the tax which you pay.

Inland Revenue Helpline 0645 000444

Alternatively, you can write with your queries to :

Inland Revenue P.O Box 37 St. Austell Cornwall PL25 5YN

However, always contact your local Tax Office and see if they can answer your question before you contact the above address.

Inland Revenue Order Line 0645 000404 (For ordering leaflets which will help explain about tax and tax related problems. All leaflets are free)

Useful forms include :

IR34 - Pay As You Earn
IR37 - Income Tax and Capital Gains Tax : Appeals
IR57 - Thinking of Working For Yourself ?
IR60 - Income Tax and Students
IR90 - A Guide to Tax Allowances and Reliefs
IR119 - Tax Relief for Vocational Training

If you have a complaint against the way in which your Tax Office has treated you then contact:

The Adjudicators Office Haymarket House 28 Haymarket London SW1Y 45P

Telephone: 0171 930 2292 or 0171 930 2294

If you are still not satisfied then you can get your local M.P to refer the issue to Parliament. They will contact the Parliamentary Commissioner for Administration, or Ombudsman as they are more commonly known. The Ombudsman will investigate your case and decide whether there is a case to answer.

The Parliamentary Commissioner for Administration Millbank Tower Millbank London SW1P 4QP

COMPANY BENEFITS Back to top

You may be lucky enough to work for a company which offers you one or more benefits. Here are some of the more common schemes which you may well be able to take advantage of:

Pension - Your state pension is unlikely to provide an adequate income when you retire. Therefore, it is a good idea to invest in a company pension. These schemes vary greatly from company to company, but there are two main types.

Final Salary Scheme - The amount you receive is linked to how long you have been at the company and your rate of pay when you leave, or retire.

Money Purchase Scheme - The amount you receive depends on how the contributions which you have made to the scheme grow. And the rate at which your fund can be swapped for a pension at retirement.

Most company pensions are contributory, whereby you are asked to pay money into the scheme. The usual amount that you will put into these schemes will be between 2 and 5 per cent. But you can put as much as 15 per cent into the pension, if you so wish. If you are lucky, you will be part of a non-contributory scheme, in which you are not obliged to pay anything into the fund.

Company Shares - When starting a new job you may well be given some free shares in your new company. The amount of shares you get will vary, depending on who you work for. You may sell your shares straight away, or keep hold of them for as long as you wish. Some schemes may not allow you to sell your shares in your first year or two.

Company Car - Your company may give you a car to help you in your work. They will also pay for the car insurance and all costs attributed to the vehicle, such as petrol, tax discs and repair work. You will, however, have to pay for your own personal use of the car. The company will probably charge you between 3p and 13p a mile for private use.

Paid Holidays - Employees are entitled to 3 weeks paid holiday a year. This figure will rise to 4 weeks in November 1999. Some companies may offer you more than four weeks holiday a year. A week is deemed to be 5 days.

Life and Health Insurance - Your company may insure you so that if you suffer illness or an accident you will be covered and entitled to financial assistance. For example, the cover may pay you two-thirds of your wages for days missed to prolonged illness. If you should die, your family will receive a cash sum, if you are covered by the companies life insurance policy.

Private Health Care - Some companies will pay part, or all of the costs for you to join a private health care scheme, such as BUPA. Comprehensive schemes may also cover your partner and children.

Loans - You may be entitled to a loan at a reduced interest rate from your company. Loans are available for things such as buying a car or a house.