Financial year

From 6th April to 5th April the following year. It’s also
sometimes known as the ‘tax year’

Gross pay

Your total earnings before any tax, National Insurance or
pension contributions are deducted. It’s also known as your
‘salary’ or ‘wages’.

Income tax

The tax you pay on most types of income including your
income from work – whether you are employed by someone
else or self-employed.

National Insurance contributions (NIC)

Payments that you and your employer make through your
working life that provide you with certain state benefits,
including your state pension.

Net pay

The amount of money you take home after income tax,
National Insurance contributions, pension contributions and
student loan repayments have been deducted. It’s often
called your ‘take-home’ pay.

Pension contributions

These are deductions from your gross pay into your
personal pension – this is different to your state pension.

Personal allowance

The amount of income you can have each year before you
pay income tax.

Student loan repayments

Student loans are taken out to fund tuition fees and other
costs of further education. The loans are repaid by a
deduction from your gross pay.

Tax code

This shows you what personal allowance you are allowed
and what rate of income tax will be deducted from your

Gross pay

It is sometimes known as the ‘PAYE code’.

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