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Module objectives • Provide an opportunity to look at the learner outcomes in the ‘Manage money’ element of the numeracy component of the National Literacy and Numeracy Framework (LNF) and the Personal and social education framework for 7 to 19-year-olds in Wales to identify areas of the curriculum that provide an opportunity for learners to develop their knowledge about ways of earning money, paying tax, keeping track of their money through an enterprise activity, and dealing with profit and loss. • Raise discussion ideas about earning money. • Share classroom ideas that can be used in Key Stages 2, 3 and 4 to develop learners’ numeracy skills in the context of earning money, income tax, and enterprise ideas and activities. • Provide a list of useful websites for Key Stages 2 to 5. • Note: Differentiation, extension ideas and effective questioning will often be suggested in the notes within the PowerPoint for teachers/trainers to use as required.
Learner aims • This module introduces earning money and enterprise. • Learners will be able to: • appreciate that money is earned through work • understand the difference between salary and wages • describe some factors that affect the amount of money a person earns • identify the minimum wage for different age groups • understand the terminology and deductions on a payslip • calculate weekly, monthly and annual wages • calculate the income tax paid based on two salaries • identify suitable enterprise activities to carry out in the classroom. The module is designed for use across key stages – not all outcomes will apply to all learners.
The National Literacy and Numeracy Framework (LNF) • The National Literacy and Numeracy Framework (LNF) focuses on four strands of numeracy: • Strand 1: Developing numerical reasoning • Strand 2: Using number skills • Strand 3: Using measuring skills • Strand 4: Using data skills.
Numeracy component of the LNF • Strand: Using number skills • Elements: • Use number facts and relationships • Fractions, decimals, percentages and ratio • Calculate using mental and written methods • Estimate and check • Manage money • The focus in this PowerPoint is on earning money and this involves carrying out calculations.
LNF learner outcomes The following table shows the Key Stage 3 learner outcomes as specified in the numeracy component of the LNF. This PowerPoint also includes an opportunity to share with learners how to calculate income tax. Highlighted in bold in the following table is where this objective features in the LNF.
The Personal and social education framework for 7 to 19-year-olds in Wales also highlights opportunities for learners to develop their knowledge in the context of earning money and understanding their finances. These are highlighted in boldon the next slide
Earning money Starter activity: How do we earn money? At what age in your life do you start/stop earning money? With young learners, share the Manage money activity sheet: How do we get our money?and the Manage money activity sheet: Wendy’s taxi.
Do you know the difference? Wages Salary Wages are generally paid per hour. You may have to ‘clock in’ and ‘clock out’ of a job that pays you wages to show your employer the number of hours you have worked. You are unlikely to be paid for time off (sickness or holidays) but may be able to work overtime for an increased hourly rate. People earning a salary are usually paid the same amount at the end of every month, calculated from an annual salary. They usually receive holiday or sickness pay, yet are unlikely to receive overtime pay as the salary covers the amount of work expected from the employee.
Discussion scenario • Paul Roberts is the managing director of FinRob Ltd., a firm manufacturing electronic components for the telecommunications industry. Paul receives a salary of £65,000 and two of his other directors each receive a salary of £42,000 per year. His sales staff have a salary of £16,000 plus benefits. These benefits include a company car, travel expenses, and commission (percentage of the sales). The average sales person earns around £25,000. The production workers receive £6.60 an hour and work a standard working week (40 hours). They may sometimes be requested to work on Saturdays for which they get paid overtime at £9.90 per hour. • Questions • How much would a production worker get paid in a standard week plus 5 hours overtime? • If the production workers were given a 1% pay rise what would their new hourly rate be? • John (a production worker) says he gets ‘time and a half’ for working overtime. What does this mean? Is he correct? • Which part of the workforce receives a salary rather than a wage? • Why do you think the sales staff get paid commission?
Jobs and their salaries Discussion ideas: How much money would you like to earn? What factors affect the amount of money a person earns?
Factors that affect the amount of money a person earns Hours worked Full-time workers in the same job as part-time workers will earn more. Some people may wish to work overtime with an increased hourly rate. Skills and/or experience A higher skilled job is likely to pay more money than an unskilled job. A person with more years experience at doing a job may be paid more than someone new to the job. A person doing a job in London may be paid more than a person doing the same job somewhere else in the UK, who in turn may be paid more than a person doing a job in areas of a less developed economy in another country. Location Demand A job that is in high demand or where there is a shortage of people doing the job may lead to someone having plenty of work or earning good wages.
The job market • Cross-curricular classroom ideas: • Invite an adult into school who is willing to be interviewed by the learners about the type of job that they do. • Ask learners to write a job advert for a fictitious character, e.g. bodyguard for Red Riding Hood. • Encourage learners to find out about the type of jobs that have been done in the past (in their locality, UK or worldwide). Do they still exist? If not, why not? Were they fair paid jobs? How old was the average worker in these jobs? What were the working conditions like? Learners could compare their investigations with the cost of living then and now. • Ask learners to investigate jobs that young people may have to do in a country with a less developed economy.
My future job What job do you want to do when you grow up? Resource: Manage money activity sheet: My future job Learners think about possible jobs they’d like to do when they grow up. They state why they’d like to do the job and what they would do with the money they earn.
Minimum wage What is meant by ‘minimum wage’? How much is the national minimum wage?
Minimum wage • The national minimum wage is the minimum pay per houralmost all workers are entitled to by law. (Find out who these workers are at www.gov.uk/national-minimum-wage/who-gets-the-minimum-wage.) • The minimum wage depends on the age of the workers and whether they are doing an apprenticeship. • You must be school leaving age (usually 16) or over to receive the minimum wage.
Minimum wage * This rate is for apprentices under 19 or those in the first year of their apprenticeship. If you’re 19 or over and past your first year you get the rate that applies to your age. www.gov.uk/national-minimum-wage-rates
Salary match Can you match the salary with the correct person? Resource: Manage money activity sheet: Salary match Learners read the information given (such as hourly rate and number of days worked) and have to use their numeracy skills to match the information with the correct salary.
Payday Resource: Spending Sense, Activity 8 ‘Payday’(pages 59–66) Download the resource at www.hwb.wales.gov.uk/cms/hwbcontent/_layouts/NGFLSolution/MaterialDescription.aspx?LearningMaterialId=44957&lang=en The resource describes fully how to deliver the activity in the lesson.
Payday The activity is presented in four stages. Stage 1: Learners are presented with the details of four characters (hourly rate and number of hours worked per week). They have to calculate the weekly, monthly and yearly pay. Example given on the next slide (see notes). Stage 2: A card-sorting activity. Learners are presented with payslip terminology (e.g. PAYE, gross pay, net pay) and their relevant definitions to match. This may be done with learners before (as a starter activity) or after (as a consolidation activity) sharing the information on slides 27–43 of this module. Stage 3: Learners are presented with the gross pay of the four characters and have to work out their net pay after the deductions (PAYE and National Insurance). Online interactive salary calculators can be used to carry out the calculations. Stage 4: Learners use a mock payslip to complete the relevant details of one of the characters or, as an extension task, they can research the salary of a job they see themselves doing in a few years time.
Payslips Discussion activity: Can I keep all the money I earn? Think about what information is usually provided on a payslip.
PAYE Gross pay Net pay Tax code Pensions Basic pay Pay date Overtime National Insurance Payment method Employee number Deductions
Payslip puzzler Resource: Manage money activity sheet: Payslip puzzler Learners are presented with a fictitious payslip. They are given the terminology used on the payslip along with eight definitions to match. They are also given five questions relating to interpreting the information given
Payslip Date: 31/08/13 Payroll ref: 5552013 Employee name: Ernie Lot Company: Any Business Ltd. Payment method: BACS What’s this? National Insurance number: AB 12 34 56 C Tax code: 944L National Insurance code: D Payments Deductions Basic salary 2867.00 Manager responsibility 472.50 Tax paid 467.53 National Insurance 271.21 Pension 166.98 Total payments 3339.50 Total deductions 905.72 Net pay 2433.78
Tax code • Your tax code will show how much income you are allowed to earn before you start to pay tax (your personal allowance). • A tax code is the first three numbers of your personal allowance followed a letter. Most people have the letter ‘L’ which indicates that they have the basic tax allowance. • So a tax code ‘944L’ means that a person can earn £9,440* before they start to pay tax. • * Remember tax codes and personal allowance may change each year. For updated tax codes visit www.hmrc.gov.uk/rates/it.htm.
Income tax • All workers who earn over a certain amount each year payincome tax. This is the amount of money paid to the government which helps everyone in the community, such as schools and hospitals. • Nearly all working people in the UK are allowed to earn up to a certain amount and not pay tax on that income. This amount is called a Personal Allowance, e.g. £9,440 in tax year 2013/14. • The amount of tax you pay on earnings over £9,440 is a percentage of what you earn (shown in the table below).
Payslip Date: 31/08/13 Payroll ref: 5552013 Employee name: Ernie Lot Company: Any Business Ltd. Payment method: BACS Tax code: 944L National Insurance number: AB 12 34 56 C National Insurance code: D Payments Deductions What’s this? Basic salary 2867.00 Manager responsibility 472.50 Tax paid 467.53 National Insurance 271.21 Pension 166.98 Total gross payment 3339.50 Total deductions 905.72 Net pay 2433.78
National Insurance • Everyone receives their National Insurance number just before their 16th birthday. This number will stay with you for life. It is a mixture of letters and numbers, e.g. AB 12 34 56 C. • The amount of National Insurance contributions that you have to pay depends on your earnings and your type of employment. • National Insurance is a percentage of your wages. Here is an example of a typical person who is employed. For more information about National Insurance go to www.hmrc.gov.uk/ni
Payslip Date: 31/08/13 Payroll ref: 5552013 Employee name: Ernie Lot What’s this? Company: Any Business Ltd Payment method: BACS Tax code: 944L National Insurance number: AB 12 34 56 C National Insurance code: D Payments Deductions Basic salary 2867.00 Manager responsibility 472.50 Tax paid 467.53 National Insurance 271.21 Pension 166.98 Total gross payment 3339.50 Total deductions 905.72 Net pay 2433.78
BACS BACS is the Bankers Automated Clearing System. If employers use BACS to pay you it means that your wages will go straight into your bank account on a set date of every month.
Payslip Date: 31/08/13 Payroll ref: 5552013 Employee name: Ernie Lot Company: Any Business Ltd. Payment method: BACS Tax code: 944L National Insurance number: AB 12 34 56 C National Insurance code: D What’s this? Payments Deductions Basic salary 2867.00 Manager responsibility 472.50 Tax paid 467.53 National Insurance 271.21 Pension 166.98 Total gross payment 3339.50 Total deductions 905.72 Net pay 2433.78
Deductions Fill in the blanks with the information you have learnt so far. Both ………………….and ………….are deducted from your pay. These are called compulsory deductions because you must pay them. Everyone is allowed to earn a certain amount of money before tax is taken off. This is called your ……………………….. For most people this amount is £………. and your employer uses a ...……… on your payslip to show this. Once your income goes above this amount you will have to pay tax at the basic rate of …..%. This means …..p in every pound is paid in income tax. If you earn over £……………… then you have to pay the higher rate of …..% on the extra earnings. The additional rate of income tax is …..% and this is paid by people earning over £………………… National Insurance personal allowance tax code tax 9,440 40 45 20 150,000 32,010 20
Deductions Fill in the blanks with the information you have learnt so far. Both ……………… and ……… are deducted from your pay. These are called compulsory deductions because you must pay them. Everyone is allowed to earn a certain amount of money before tax is taken off. This is called your ………………… For most people this amount is £ …… and your employer uses a ...……… on your payslip to show this. Once your income goes above this amount you will have to pay tax at the basic rate of %. This means p in every pound is paid in income tax. If you earn over £ …… then you have to pay a higher rate of % on the extra earnings. The additional rate of income tax is ….. % and this is paid by people earning over £ . National Insurance tax personal allowance 9,440 tax code 20 20 32,010 40 45 150,000
Payslip Date: 31/08/13 Payroll ref: 5552013 Employee name: Ernie Lot Company: Any Business Ltd. Payment method: BACS Tax code: 944L National Insurance number: AB 12 34 56 C National Insurance code: D Payments Deductions Basic salary 2867.00 Manager responsibility 472.50 Tax paid 467.53 National Insurance 271.21 Pension 166.98 What’s this? Total gross payment 3339.50 Total deductions 905.72 Net pay 2433.78
Workplace pension A workplace pension is a way of saving for your retirement that is arranged by your employer. Other terms for workplace pensions include: ‘works’, ‘company’, ‘work-based’ and ‘occupational’ pensions. How do they work? A percentage of your pay is put into a pension scheme automatically every payday. You will see the amount on your payslip. In most cases your employer and the government also add money into the pension scheme. The pension money builds up and pays you an income when you are at a stage in your life to start receiving it. For more information go to www.gov.uk/workplace-pensions/about-workplace-pensions
Workplace pensions • Auto-enrolment • A new law means that every employer must automatically enrol workers into a workplace pension scheme if they: • are aged between 22 and state pension age • earn more than £9,440 a year • work in the UK. • This is called ‘automatic enrolment’. For more information go to www.gov.uk/workplace-pensions/about-workplace-pensions
Payslip Date: 31/08/13 Payroll ref: 5552013 Employee name: Ernie Lot Company: Any Business Ltd. Payment method: BACS Tax code: 944L National Insurance number: AB 12 34 56 C National Insurance code: D Payments Deductions Basic salary 2867.00 Manager responsibility 472.50 Tax paid 467.53 National Insurance 271.21 Pension 166.98 What’s this? Total gross payment 3339.50 Total deductions 905.72 Net pay 2433.78
Gross pay Gross pay is the amount of money you have earned in a given period. In this example, Ernie Lot receives a monthly payslip, so his gross pay is the amount of money he earned that month based on his salary for the job that he does. There are two payments made, as he has a job with extra responsibility for which he is paid accordingly.
Payslip Date: 31/08/13 Payroll ref: 5552013 Employee name: Ernie Lot Company: Any Business Ltd Payment method: BACS Tax code: 944L National Insurance number: AB 12 34 56 C National Insurance code: D Payments Deductions Basic salary 2867.00 Manager responsibility 472.50 Tax paid 467.53 National Insurance 271.21 Pension 166.98 Total gross payment 3339.50 Total deductions 905.72 What’s this? Net pay 2433.78
Net pay Net pay is the amount of money you get paid in a given period. In this example, Ernie Lot receives a monthly payslip, so his net pay is the amount of money he took home for a month’s work. It is the amount of money he received after his deductions were subtracted. Net pay is sometimes called ‘your take home pay’.
Calculating income tax • Income tax is a tax on income. • Some examples of what counts as taxable income include: • employment income: income from full time, part-time, temporary employment or self-employment/partnership • rental income: money you earn from renting out a second property. • You are only taxed on ‘taxable income’ above a certain level. This amount is called a Personal Allowance, e.g.£9,440 in tax year 2013/14. • Income tax is only due on taxable income that’s above your tax-free allowances. • For more information go to www.hmrc.gov.uk/incometax/taxable-income.htm
Calculating income tax You pay income tax on earnings over £9,440 and this is calculated as percentage of what you earn. These percentages are presented in a basic table below (as seen earlier on slide 29). Use the table and the information given to calculate the income tax paid by the people on the following slides.
Calculating income tax Sara earns £24,000 a year. Work out how much income tax she pays. Taxable income: 24000 - 9440 =14560 £24,000 £9,440 20% is 0.2 20% of 14,560 is given by 0.2 x 14560 = 2912 £14,560 20% of taxable income £2912 Sara pays £2,912 income tax per year. How much is this per month?
Evan earns £45,000 a year. Work out how much income tax he pays in a year. £45,000 20% is 0.20 20% of £32,010 is given by 0.20 x 32010 = £6,402 Gross income £45,000 – £9,440 = £35,560 Personal allowance £9,440 Taxable income £35,560 Basic tax rate 20% of the first £32,010 of the taxable income = £6,402 40% of the remainder taxable income (35,560 – 32,010 = £3,550) 40% of £3,550 = £1,420 Higher tax rate 40% of 3550 is given by 0.40 x 3550 = £1,420 Total income tax £6,402 + £1,420 = £7,822 Evan pays £7,822 income tax per year, £652 per month and £150 a week.
Is it OK? This activity is about the ethics of accepting money for certain activities related to the world of work which are illegal or on the borderline of illegality. Resource: Spending Sense, Activity 10 ‘Is it OK?’(pages 79–83) Download the resource at http://learning.wales.gov.uk/docs/learningwales/publications/131017-spending-sense-en.pdf The resource describes fully how to deliver the activity in the lesson.
Adding up to a lifetime This is a free online resource which follows four characters and how they deal with financial situations. It is suitable for Key Stage 3 to Key Stage 5. The package has approximately 25 hours of learning activities which learners can complete online. It is presented as five modules: • Life as a student (aged 14 upwards) • Working life • Relationships • New life • Active retirement. The modules offer the whole range of manage money topics including earning money, visit www.addinguptoalifetime.org.uk Each module has an audio tutorial which can be listened to in English or Welsh.
Websites and resources • www.pfeg.org pfeg (Personal Finance Education Group) is an independent charity providing a wealth of resources to support financial education in schools. See ‘Learning about Money in the Primary Classroom’ and ‘My Money Mathematics Resources’. • www.barclaysmoneyskills.com/en/Information/resource-centre.aspx A variety of resource packs for learners aged 4–25. • www.nationwideeducation.co.uk > Employability Skills Sections for learners and teachers entitled ‘Working Life’, ‘Working Skills’ and ‘Working World’ for learners aged 4 to 18 and older (printable resources and online games). • www.Addinguptoalifetime.org.uk View the module entitled ‘Working Life’ (Welsh audio available). • www.moneyadviceservice.org.uk/en/categories/young-people-and-money Information on managing your money as a student. • http://rbsmoneysense.co.uk/schools/resources/ A free interactive online programme providing resources to support learners manage their money. • www.hmrc.gov.uk/incometax/taxable-income.htm Information available about income tax. • www.gov.uk/national-minimum-wage/who-gets-the-minimum-wage Information about the minimum wage. • www.gov.uk/workplace-pensions Information about pensions. • www.hwb.wales.gov.uk/cms/hwbcontent/Shared%20Documents/vtc/atebol/maths/eng/index.htmlSpending Sense resource including 18 money-management activities.
