Casual, part-time, temporary workers - tax and National Insurance

If you work part-time or on a casual or temporary basis you must pay Income Tax and National Insurance contributions if you earn more than a certain amount each year. This applies whether you are employed or self-employed.

If you work for an employer

If you're employed on a casual, temporary or part-time basis by law your employer must:

• deduct tax and National Insurance Contributions from your wages
• give you payslips
• deduct student loan repayments, if relevant
• give you a P45 when you leave
• give you a P60 tax summary at the end of each tax year if you still work for the employer

What about cash in hand?

It's illegal for your employer to pay you cash in hand without deducting tax and National Insurance Contributions from your wages.

If you accept money in this way, you risk losing your employment rights and the right to some benefits, such as:

• maternity or paternity leave
• sick pay
• Jobseeker's Allowance

In addition, you could end up having to pay the tax and National Insurance contributions yourself.

If you suspect your employer of not paying tax or Nationa Insurance Contributions on your wages you can report them in confidence using the Tax Evasion Hotline on 0800 788 887. Lines are open Monday to Friday 8.00 am to 6.00 pm and are normally less busy before 9.00 am.

• Tax for the employed  
• PAYE forms: P45, P46, P60, P11D  
• Reporting tax fraud  
• Reporting tax evasion
• The cost of contacting 08 and 03 telephone numbers

If you work for more than one employer

If you work for more than one employer, you'll get a special tax code to take this into account.

Your tax allowances - amounts that you can get to reduce your tax bill - will normally be given against the pay from your main job. Your other job(s) will be taxed at the basic or higher rate, depending on your total income.

• If you have more than one tax code
• Tax for the employed

Employment rights

All employees have rights, whether they are full or part-time, casual or temporary, including:

• holiday pay
• National Minimum Wage
• protection from discrimination

If you're concerned about your rights, you can ask a union for help or get free advice from your local Citizens Advice Bureau.

• Check the facts about employment rights and find a union  
• Find your nearest Citizens Advice Bureau    

If you're a student

If you're a student, you still pay tax on your income unless all of the following apply:

• you're a full time student in the UK, only working in the holidays
• you're returning to full time education after the holiday
• your total income for the year is below the Personal Allowance

Ask your employer for form P38S Student Employees - and tax won't be deducted from your earnings. National Insurance will still be deducted if you earn more than £110 a week.

• Find out more about tax for students from the HMRC website  

If you work for yourself

If you're self-employed on a temporary or part-time basis you must register as self-employed with HM Revenue & Customs as soon as you start work. You'll have to complete a Self Assessment tax return and are responsible for paying your own tax and National Insurance Contributions on the income you earn.

Even if you don't think you'll earn enough to need to pay tax, you still need to complete a tax return.

• Self-employed tax and National Insurance
• Register online as self-employed

Working for cash

You can accept cash payments for work you do, but it's illegal for you not to declare this on a Self Assessment tax return, and pay Income Tax and National Insurance Contributions if these are due. This will depend on your overall taxable income in the tax year.

• Tax and National Insurance for the self-employed

Checking your employment status

It's important to understand the difference between being employed and self-employed, as this affects how you pay tax and National Insurance contributions.

• Read more to work out if you're employed or self-employed  

If you’re a pensioner

You stop paying Class 2 National Insurance contributions as soon as you reach State Pension age and Class 4 contributions from the start of the tax year after the one in which you reach State Pension age. But you may still need to pay Income Tax.

• Do you have to pay tax in retirement?
• Making sure you've stopped paying National Insurance

Does how much you earn affect the tax you pay?

Everyone gets a personal tax-free allowance (basic Personal Allowance is £7,475 in 2011-12). You don't pay tax on anything you earn below this amount.

The National Insurance you pay also depends on your earnings or profits and whether you’ve reached State Pension age.

If you’re an employee, you do not pay any if you earn less than £139 a week.

If you’re self-employed, you may not have to pay Class 2 National Insurance contributions if you qualify for a Small Earnings Exception where your profits for the year are expected to be less than £5,315 for 2011-12.

Class 4 National Insurance contributions will only be due if your profits exceed £7,225 in 2011-12. If you're a pensioner, you don't have to pay National Insurance contributions.

• Personal Allowance
• National Insurance - the basics
• Class 2 National Insurance contributions
• Class 4 National Insurance contributions
• Do you have to pay tax in retirement?

More useful links

• Income Tax - the basics
• Employment rights, looking for work and more (employment section)  
• Working when you're over 50 (pensions and retirement planning section)