Statutory and voluntary deductions
Some deductions are required by law and some are the employee's choice. Sort them, then take a payslip from gross to net.
This path is practice in how the records and the sums work. It is not tax advice. Any rate or allowance in a question is an example for that question, so check GOV.UK for the current figures.
Task 1Two kinds of deduction4 questions
- Statutory deduction
- one the law requires. The employer must take it, and the employee cannot refuse
- Voluntary deduction
- one the employee has agreed to. The employer needs the employee's agreement in writing
- Statutory: income tax, employee's National Insurance, student loan repayments, court orders
- Voluntary: pension contributions, union subscriptions, giving to charity through the payroll, repaying a loan from the employer
An employee who is put into a pension automatically can choose to leave it, so pension contributions count as voluntary.
Task 2A whole payslip, from gross to net4 questions