If you work part-time or on a casual or temporary basis you usually pay Income Tax and National Insurance contributions if you earn more than a certain amount each year. This applies whether you are employed or self-employed.
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If you're employed on a casual, temporary or part-time basis, by law your employer must:
It's illegal for your employer to pay you cash in hand without deducting tax and National Insurance contributions from your wages.
If you accept money in this way, you risk losing your employment rights and the right to some benefits, such as:
In addition you could end up having to pay the tax and National Insurance contributions yourself.
If you suspect your employer of not paying tax or National Insurance contributions on your wages you can report them in confidence using the Tax Evasion Hotlineby following the link below.
If you work for more than one employer, you'll get a special tax code to take this into account.
Your tax allowances - amounts that you can get to reduce your tax bill - will normally be given against the pay from your main job. Your other job(s) will be taxed at the basic, higher or additional rate, depending on your total income.
All employees have rights, whether they are full or part-time, casual or temporary, including:
If you're concerned about your rights, you can ask a union for help or get free advice from your local Citizens Advice Bureau.
If you're a pensioner, that is, you are State Pension age or older, you don't need to pay National Insurance contributions on any earnings you receive but you may still need to pay Income Tax - follow the links below to find out more.
If you're a student, from 6 April 2013 employers will no longer use the P38(S) process, your employer will operate PAYE (Pay As You Earn) to deduct Income Tax and National Insurance from your wages. Although the P38(S) process has stopped, nearly everyone who lives in the UK is entitled to an Income Tax Personal Allowance. This is the amount of income you can earn or receive each year without having to pay tax on it. The Personal Allowance for the tax year 2013-14 is £9,440.
If you're self-employed on a temporary or part-time basis you must register for business taxes and National Insurance with HM Revenue & Customs (HMRC) as soon as you start work. You'll have to complete a Self Assessment tax return and are responsible for paying your own tax and National Insurance contributions on the income you earn. Even if you don't think you'll earn enough to need to pay tax, you still need to complete a tax return.
You can accept cash payments for work you do, but it's illegal for you not to declare this on a tax return, and you must pay Income Tax and National Insurance contributions if these are due. This will depend on your overall taxable income in the tax year.
It's important to understand the difference between being employed and self-employed, as this affects how you pay tax and National Insurance contributions. Read more in HMRC related article.
You stop paying Class 2 National Insurance contributions as soon as you reach State Pension age and Class 4 contributions from the start of the tax year after the one in which you reach State Pension age. But you may still need to pay Income Tax.
Everyone gets a personal tax-free allowance (basic Personal Allowance is £9,440 in 2013-14). You do not pay tax on anything you earn below this amount.
The National Insurance you pay depends on your earnings or profits and whether you've reached State Pension age. If you're an employee, you do not pay any if you earn less than £149 a week (for the 2013-14 tax year). If you're self-employed, you may not have to pay Class 2 National Insurance contributions if you qualify for a Small Earnings Exception where your profits for the year are expected to be less than £5,725 for 2013-14. Class 4 National Insurance contributions will only be due if your profits exceed £7,755 in 2013-14. If you're a pensioner, you don't have to pay National Insurance contributions.