Salary usually refers to the amount of money a person earns over a year. For example, if a shop assistant has a salary of £18,000 per year, his/her monthly pay would be £1,500 ( ). £1,500 is the gross pay.
If the shop assistant has to pay tax at a rate of 20% and has to pay £100 national insurance then what is his/her net pay?
Tax to pay =
National insurance deduction = £100
Net pay =
£1,100 is their net or 'take home' pay.
The employee pays income tax directly to the government. It is a percentage of the gross pay depending on how much is earned - the more you earn, the higher the percentage. People earning below a threshold pay level don't need to pay income tax at all.
Stephanie’s pay is £420 per week.
She works for 37½ hours per week.
Work out her hourly rate.
Stephanie wants to work out her annual salary. She says:
"There are 4 weeks in a month, so I will multiply £420 by 4.
There are 12 months in a year, so I will multiply the answer by 12: "
Does her method give the correct amount for her annual salary?
No, Stephanie's yearly pay is more as there are 52 weeks in a year and this method only gives = 48 weeks.