Key stage 4 scheme of work:
What does the UK economy have to do with me?
Lesson 3 of 6
How much of our pay goes to the government?
Context
This lesson is part of a scheme of work that comprises six lessons
for teaching Key Stage 4 Citizenship in line with the requirements of
the Citizenship national curriculum. The lesson is part of the ACT
model Key Stage 4 curriculum, which can be used and adapted to fit
with your schoolʼs provision.
Each scheme of work has an enquiry question as the focus and is
then organised into smaller questions that provide a learning focus
for each lesson.
Overview
In this lesson, students find out about pay and taxation. They learn
to recognise the key features of payslips and understand
terminology such as ʻgross payʼ, ʻnet payʼ and ʻdeductionsʼ. They
then learn how Income Tax and National Insurance contributions
are calculated and calculate the deductions on earnings. Finally,
they consider whether they think the UKʼs tax system is fair.
Citizenship skills
and concepts
Skills: Making judgements, evaluation, communication, debate
Concepts: Fairness, responsibilities, legislation
Essential teaching
guidance
Finance can be a sensitive topic for discussion. It is essential that
ground rules are agreed to create a safe learning environment prior
to teaching. Students and teachers should all agree to make
positive contributions, listen without interrupting, respect each
other's views and agree that it is OK to make mistakes as this is how
we learn. Use distancing techniques, such as case studies, rather
than encouraging students to discuss their own or othersʼ situations
in the lesson.
Be particularly careful when setting the takeaway task for this
lesson as it involves students carrying out independent research.
You may wish to provide guidance on appropriate sources of
information.
If you are concerned by any comments or disclosures made by your
students, please refer to your own schoolʼs safeguarding
procedures or your SLT/designated safeguarding lead.
Timings for each task are given as guidelines. Please use your
professional judgement when deciding how to deliver the
tasks, depending on time available and your studentsʼ needs.
Learning questions
● What information is found on a payslip?
● How is Income Tax calculated?
● How are National Insurance contributions calculated?
● Is the current system of Income Tax and National Insurance
fair?
Lesson resources
Slide presentation for the lesson
Handout: Sample payslip (for task 1)
Handout: How to calculate Income Tax (for task 2)
Handout: How to calculate National Insurance contributions (for
task 2)
Worksheet: Calculating Patrick and Pollyʼs deductions (for task 3)
Glossary of key terms
Differentiation
Use the annotated payslip slide to discuss and explain
terminology.
Ask students to calculate fewer deductions.
Work through the calculations on the board with the class.
Encourage students to use the glossary of key terms.
Assessment
opportunities
Use questioning techniques to gauge understanding about previous
learning.
If using the mindmap in the starter, identify areas that might need
recapping.
Assess studentsʼ skills development by moving between groups and
listening to discussions. Identify students who are less involved
with discussion and encourage them to share their opinions and
perspectives on the topic.
Do now / starter /
entry task
(5 minutes)
Sharing key facts
Slides 2 to 4
In small groups, ask the students to share the key facts they
researched about Income Tax and National Insurance as a
takeaway task from Lesson 2.
Then share the facts as a class. Which group found the most?
If you didnʼt ask students to complete the takeaway task, then
carry out a quick class recall session as a mindmap on the board.
Share slides 3 and 4 and explain that this lesson we are going to
focus on investigating how we are taxed on the money we earn.
Task 1
(15 minutes)
Tax and a payslip
Slides 5 to 10
Show students slide 5 and ask them why they think Diya has not
been paid as much as they expected (Income Tax and National
Insurance deductions). To check the accuracy of her pay, Diya
would be best to look at their payslip and speak to their manager.
Watch the five-minute video ʻTax facts: Starting your first jobʼ.
There is a link to this on slide 6.
Check the studentsʼ understanding and recap on what they have
learned from the film by asking questions such as:
● What is Income Tax? (money we pay to the government from
our earnings)
● How does the government use the money we pay as tax?
(the government uses tax to pay for things like the health
service, police, education and pensions)
● Do you have to pay tax on everything you earn? (no, you
only pay tax once the amount you earn reaches a certain
limit)
● What does HM Revenue & Customs do? (calculate how
much tax you should pay)
● When do you receive your National Insurance number?
(aged 16)
● Why is it important to pay National Insurance? (it entitles
you to get certain benefits, like a pension)
Show the students slide 7 and ask them to work in pairs to try to
explain what we mean by:
● deductions
● gross pay
● net pay
If they are struggling, ask if they can think of where else they might
have seen the words ʻgrossʼ and ʻnetʼ (e.g. the gross and net weight
of a product or a vehicle). Encourage them to use the glossary of
key terms to help with this task.
Discuss studentsʼ understanding of the key vocabulary and share
the definitions on slide 8.
Ask the class what type of information they would expect to see on
a payslip. Show the example on slide 9 to prompt ideas and then
share the annotated version on slide 10 to explain what important
terms mean. Highlight the following key areas on the payslip:
● Tax code – most people will have the code 1257L, meaning
they have a tax-free allowance of £12,570 per year. The L
may be replaced by other letters – the gov.uk website listed
in the additional resources section below gives a full
explanation of these.
● National Insurance (NI) number – a series of letters and
numbers unique to a specific person. This is used to ensure
that tax and NI contributions are recorded accurately
against an individualʼs name.
● Payments – explain the difference between a wage (usually
calculated based on the number of hours worked) and a
salary (a set figure paid for a week or a month). You could
also explain how some salaried jobs pay overtime for
working over and above the set hours.
● Year to Date – provides ongoing information about the total
amount of deductions that have been made throughout
the current financial year.
If you think it would be helpful, give the students a hard copy of
slide 9 (Handout: Sample payslip) for them to refer to.
Task 2
(10 minutes)
Calculating Income Tax and National Insurance
Slides 11 to 15
Give students copies of the handouts ʻHow to calculate Income
Taxʼ and ʻHow to calculate National Insurance contributionsʼ. Talk
through the information on the sheets to ensure that students
understand how the two most common deductions are calculated.
Use slides 11 and 12 to recap on the key facts about Income Tax
and work through Diyaʼs Income Tax as an example.
Then use slides 13 and 14 to recap on the key facts about National
Insurance contributions and work through the calculations for
Diyaʼs National Insurance as an example.
Finally, bring together the information about Income Tax and
National Insurance contributions to calculate Diyaʼs overall pay for
the week and overall deductions (slide 15).
Task 3
(15 minutes)
Calculating deductions
Slides 16 to 18
Give the students a copy of the handout ʻCalculating Patrick and
Pollyʼs deductionsʼ.
Ask the students to use the handouts from the previous task to
calculate:
● how much Income Tax Patrick and Polly pay
● their National Insurance contributions
● the total deductions paid
● the percentage of their income that goes in deductions
Share slides 17 to 18 with the students so they can check their
answers. You could also use an online pay calculator, for example:
UK Tax Calculators
Plenary / reflection
(10 minutes)
Is tax fair?
Slide 19
Having looked at how much tax Patrick and Polly pay, do the
students think the tax system is fair? Would it be fairer to change to
a system in which everyone simply pays a figure such as 20% of
their overall income? Who would benefit from this? Who would
lose out?
Ask the students to write down their ideas and share them as part
of a class discussion.
Takeaway task
In preparation for the next lesson, ask the students to talk to
friends and family to find out their views on tax.
● Do people think the tax system is fair?
● How do they feel about paying taxes?
Additional teacher
links & resources
● What Your Tax Code Means (Gov.uk)
● UK Tax Calculators
● Repaying Your Student Loan (Gov.uk)
© 2023 Association for Citizenship Teaching
Sample payslip
© 2023 Association for Citizenship Teaching
How to calculate Income Tax
Income under
£12,570
● This is less than the tax-free personal allowance.
● No Income Tax is paid.
Income between
£12,570 and
£50,270
● Calculate the total taxable amount by taking £12,570
away from the income.
● Calculate 20% of the taxable total to find the
total Income Tax paid.
Income between
£50,270 and
£150,000
● Calculate the taxable income in the lowest tax band by
taking £12,570 away from £50,270. Calculate 20%
of this amount.
● Calculate the taxable income in the middle tax
band by taking £50,270 away from the total
income. Calculate 40% of this amount.
● Add the values from the two bands to find the total
Income Tax paid.
© 2023 Association for Citizenship Teaching
How to calculate National Insurance
contributions
Income under
£12,570 per year
● This is less than the tax-free personal allowance.
● No National Insurance contributions are paid.
Income between
£12,570 and £50,270
● Calculate the total taxable amount by taking £12,570
away from the annual income.
● Calculate 12% of the taxable total to find the total
National Insurance contributions paid.
Income over
£50,270
● Calculate the taxable income in the 20% National
Insurance band by taking £12,570 away from £50,270.
Calculate 20% of this amount.
● Calculate the taxable income in the 2% National
Insurance band by taking £50,270 away from the total
income. Calculate 2% of this amount.
● Add the values from the two bands to find the total
National Insurance contributions paid.
© 2023 Association for Citizenship Teaching
Patrick
Patrick wanted to help others and has just started
working with young offenders as a prison officer.
Patrickʼs annual income is £25,000.
Polly
Polly has worked as an optometrist for the
last four years at a private clinic.
Pollyʼs annual income is £75,000.
Calculating Patrick and Pollyʼs deductions
Patrick and Polly are twins who live
together. Their salaries are quite
different!
Use the information sheets to
calculate:
● how much Income Tax Patrick
and Polly pay
● their National Insurance
contributions
● the total deductions they pay
● the percentage of their
income that goes in
deductions
photo by Christopher Bill on Unsplash
