How you pay tax and set up a pension depends on whether you are an employee or self-employed.
You’ll pay income tax and National Insurance on your wages through the PAYE system.
You can earn a certain amount of income each year, called your personal allowance, before you need to pay any income tax.
In general, everyone gets the same personal allowance of £12,500 for the tax year 2020/21.
You pay National Insurance contributions if you earn more than £183 a week.
The GOV.UK website has more information about taxes.
You’ll usually pay one of two types of National Insurance:
You’ll find more information on National Insurance rates at the GOV.UK website.
You’re entitled to the same tax-free personal allowance as an employee – see the section above for details.
The law states that employers must automatically enrol their employees into a workplace pension scheme.
They should enrol you if:
You’ll pay into the scheme and so will your boss once you’re enrolled.
You may also get tax relief from the government. You can opt out of the pension scheme, but you’ll lose the employer and government contributions.
The Department for Work and Pensions has more information about workplace pensions.
You’re not required by law to be part of a workplace pension scheme and it’s up to you to start a pension if you wish to do so.
Pension saving an important consideration if you’re self-employed.
They can come with some unique benefits, including: