Personal Income is the name given to money being received by a person. Income can come from a variety of sources, depending on the individual circumstances for each person:
• salary, which is shown as the amount earned over a year, but paid monthly;
• wages, normally paid weekly but shown as a weekly, daily or hourly rate;
• as a self-employed person, when payment may be irregular;
• benefits, which may be to help with childcare, housing or being out of work, or for the disabled;
• pension, which is paid when your retirement age is reached.
People in work will receive a payslip. A payslip will show gross income for the period, which is the amount that the company or organisation is paying the individual. The payslip will then show deductions, such as income tax, national insurance (a kind of income tax), student loan repayments, pension contributions and so on. Finally, the payslip will show the net income, which is the gross amount with all the deductions taken away. The net income is the amount that the individual will actually be paid.
1. Joe has received his payslip for the month of March. It shows gross pay of £1550, with income tax of £143, National Insurance of £84 and a pension contribution which is 4% of his gross amount. How much will Joe receive in March?
Pension contribution is 4% x £1550, which is `frac(4)(100)` x 1550 = £62.
Working out the deductions: 1550 - 143 - 84 - 62 = £1261
2. Emma is on a salary of £15,800 and works 38 hours each week, but is offered a new job paying £8.25 per hour and working 40 hours per week. She will no longer be paid for holidays, and plans to take 4 weeks holiday per year. Would she be better off taking the new job? Assume that there are 52 weeks in a year. Give a reason for your answer.
Answer: Either answer can be taken as correct providing that the reason was valid.
Yes: she would be £40 per year better off
No: she would be working an extra 96 hours for £40
The new job is worth 8.25 x 40 = £330 per week.
Over the year that is 330 x (52-4) = £15840 per year (allowing for holidays).
She would earn an extra £40 a year, but would work an extra 96 hours for that £40