You should pay income tax on earnings above your 'personal allowance'. This is the amount of income you don't have to pay tax on. The standard personal allowance for the tax year from April 2019 to April 2020 is £12,500. You may qualify for other reliefs such as working tax credits.
You should start paying National Insurance (NI) if you are earning above £166 a week.
You should have your tax and NI deducted from your pay by your employer (a system known as ‘Pay As You Earn’) and paid to HMRC.
You should be given an itemised pay slip showing deductions from your pay. If your paid by the hour and your hours vary, your payslip should show the number of hours for which you are being paid.
Your payslip should also show the different methods by which your pay is calculated, for example basic rate plus commission.
If you are earning enough to pay tax and NI, your contributions will be contributing towards entitlement to benefits such as Jobseekers’ Allowance, Statutory Maternity Pay (SMP), and the State Pension. If you do not earn above the threshold, you should not have to pay tax and NI, but this means you will not be building up your contributions record, which is used to determine entitlement to these benefits.
You may qualify for pensions auto-enrolment. To find out more, visit the website of the Pensions Advisory Service.
If you are genuinely self-employed, you have to pay your own tax.
If you are responsible for paying your own tax and NI, you should keep simple accounts of incoming wages and outgoing expenses relating to your work. If you are self-employed, you will need to pay Class 2 NI contributions. This is a weekly flat-rate payment and will give you an entitlement to benefits such as Maternity Allowance and the basic State Pension.
If you are concerned about tax and national insurance, for example because there are entries on your payslip that you don’t understand, you can contact TaxAid, a tax charity that helps people on low incomes with their tax affairs. It has a helpline. You can also find advice and guides on the website of the tax charity, the Low Incomes Tax Reform Group.
If you are on low income and aged 60 or over, you can contact Tax Help for Older People – phone 0845 601 3321 or 01308 488066. Tax Help for Older People does not offer support to self-employed taxpayers.