Taxes are collected by HM Revenue & Customs to pay for public services, such as transport, health and education.  In this section we will talk about the different types of tax that you may have to pay.

Income Tax
You pay Income Tax on:

• you're wages if you are employed
• the profits from your business if you are self-employed
• some benefits, like Jobseeker's Allowance, Carer's Allowance and Incapacity Benefit.

How You Pay Your Taxes:
You pay tax on your wages through a system called Pay As You Earn (PAYE).  Your employer uses this system to deduct Income Tax and National Insurance contributions from your wages before they pay you.

You can go without paying tax if you earn anything up to £5,225 a year.

Tax on Casual, Part-Time or Temporary Work
If you work part-time or on a casual or temporary basis you must pay Income Tax and National ensurance if you earn more than £5,225 per year.

'Cash in Hand'
It is illegal for your employer to pay you 'cash in hand' without deducting tax and NICs from your wages.  If you accept money in this way then you risk losing your employment rights and the rights to some benefits.

As well as paying Income Tax on your wages and on income from self-employment, you also have to pay National Insurance contributions.

National Insurance
If you are aged 16 years and over, and you are working then you will be paying National Insurance contributions - that is, if you are earning over a certain amount. 

Your National Insurance number is your own personal account number which ensures that the National Insurance contributions and the tax that you pay are properly recorded on your account. 

Claim to many benefits depends on your National Insurance contribution record so it is very important that you only ever give your NI number to:

• HM Revenue & Customs (HMRC)
• your employer
• Jobcentre Plus, if you claim Jobseeker's Allowance
• your local council, if you claim Housing Benefit

 How much you pay:

• if you earn above £100 a week you will pay 11% of the amount you earn.
• You will pay a lower amount if you are a member of your employer's contracted pension scheme.