Money Skills - assets-barclayslifeskills-production ... · Money Skills: Money at work– Activity one | 4 Moneyo SykilSskyyS:eCt Bcmoneyo Scgapr Activity steps 1. Getting paid at

Money Skills:Money at workAge range: 16-19

barclayslifeskills.com © Barclays 2015

Contents03 Activity One: Becoming an employee

11 Activity Two: Managing a project

19 Activity Three: Self-employment

Note: see LifeSkills Content Guide PDF on barclayslifeskills.com for programme overview and curriculum links.

Student Sheet PDF Presentation SlidesPDF

Money Skills: Money at work– Activity one | 3


Activity One: Becoming an employeeTime needed: 30 minutes

AimTo help students understand how they will be paid for work.

Key learning outcomes By the end of the activity students will have:• explored different ways of getting paid for work

• discovered what information is provided on a payslip

• calculated tax and National Insurance deductions from gross income

Resources• Student Sheet 1.1:

Methods of payment (one per group)

• Student Sheet 1.2: Understanding a payslip (one per group)

• Student Sheet 1.3: Understanding a payslip – answers (one per group)

• Student Sheet 1.4: Tax calculations (one per group)

• Student Sheet 1.5: Tax calculations – answers (one per group)

• Money Skills: Money at work PDF Presentation Slides

Make sure you have enough copies of the Student Sheets before you begin the session.

Note: students who want to collect evidence of their progress through LifeSkills can add their worksheets and summary sheets to a folder, along with any additional relevant materials.



Activity steps1. Getting paid at work • Tell the students that this session will introduce them to some ‘world of work’ scenarios

that will help them prepare for employment. You’re going to start with issues of getting paid for work you do and then move on to some hands-on work-related activities

• Introduce the topic by asking how many of them have a job of some kind (show of hands). Ask one or two of those that respond how they are paid for the job they do and how often they receive their pay. Gather responses on the board. Answers should include, weekly, monthly, in cash, into a bank account. Some students may ask questions about your working arrangements and salary, in which case you should respond with: ‘It wouldn’t be appropriate for me to discuss that’

• Ask the students how their pay is calculated. The most likely response will be that they are paid on an hourly rate, either weekly or monthly

• Ask the students how they know if they are being paid a fair rate for the job they do. What might the hourly rate be based on? The response is likely to be the minimum wage. Ask the students if they know what the minimum wage is. Show PDF Presentation Slide MW1.1 and discuss the difference between the minimum wage and the living wage

• Explain to the students that in full-time employment they will probably be paid an annual salary, which is divided into 12 equal parts over the year

• Hand out Student Sheet 1.1. Divide the students into small groups or pairs and ask them to work through the activity to match the definitions to the words. This should help them test their understanding of the different ways we can be paid for work we do and discover the meaning of any that are unfamiliar. This should take about 10 minutes

• Go through the answers with the group to check they have understood everything: A6, B5, C4, D2, E7, F1, G3

• Ask the students if any of them have regular monthly bills to pay. Some students are likely to have a mobile phone bill; some may also pay rent. Explain that in situations where you are paid weekly, it’s important to set aside money each week to ensure you have enough to pay any monthly bills. The students may have discussed the concept of budgeting in Money Skills volunteer-led lesson ‘Survival money skills’ and you can remind them of this

Extension ideaStudents could research the minimum wage using the calculator at:www.gov.uk/national-minimum-wage/what-is-the-minimum-wage and research the living wage and companies that support it at www.livingwage.org.uk/

MW1.1

PDF

Sheet 1.1



2. Understanding a payslip• Ask students how many of them have received a payslip from an employer (show of

hands). Some are likely to have received one. Explain that they’re going to work through the different items on a payslip and identify what each item is

• Introduce that deductions are made from gross pay, starting with Income Tax. Use these prompt questions to get a discussion going, asking students to contribute their ideas

- What is Income Tax? (a tax levied on wage earners)- Does everyone have to pay Income Tax? (only those earning over a certain amount)- What is Income Tax used for? (government spending on things like health, education,

armed forces)- Do all employees pay the same amount of tax? (No, there are tax ‘bands’ set so higher-

wage earners pay a higher percentage of their earnings in tax)

• Explain that it’s important to know how to check any deductions that have been made on your payslip to ensure you are paid the right amount

• Give out Student Sheet 1.2 (one per group). Ask the students in their groups or pairs to identify which description matches which element of the payslip (this should take about 10 minutes). Tell them that they don’t have to be able to identify them all but they should see how many they can get. You can give each student a copy of Student Sheet 1.3 with the answers on to keep

• Display PDF Presentation Slide MW1.2. Talk through how the tax deduction example works, explaining that the tax code is based on the amount you are allowed to earn before paying any tax. Students can check the current tax codes and rates on the HMRC website

• Write on the board these questions: ‘What is National Insurance?’ and ‘What is it for?’ Ask the groups to discuss for a few minutes what they think NI is and write a short definition. (They can use mini whiteboards if they’re available)

• Take ideas from the groups and compare with the definition on PDF Presentation Slide MW1.3

• Then talk through the example of an NI calculation, which is also displayed on PDF Presentation Slide MW1.3. Explain to students that most people remember about having to pay tax but it’s easy to forget the NI contributions we have to make when working out our monthly budget

• Give out Student Sheet 1.4. Using the examples on the handout, get them to check the calculations and identify what the correct amount of tax and NI paid should be. The answers are given on Student Sheet 1.5. Let students know that if they want to check tax codes and rates they can do so on the HMRC website

Extension ideaIf you have access to the internet, students could try the interactive tax calculator atwww.moneysavingexpert.com/tax-calculator/

MW1.2

PDF

Sheet 1.3

Sheet 1.2

MW1.3

PDF

Sheet 1.5

Sheet 1.4



Student Sheet 1.1Methods of paymentMatch the definition of each method of receiving pay to the word that describes it. Write the item number next to the correct definition.

Item

1 Performance-related pay (commission)

2 Bonus

3 Profit-sharing

4 Minimum wage

5 Living wage

6 Annual salary

7 Cash pay packet

Definition Item No.

AAnnual amount paid in 12 equal instalments direct to your bank account

B

Pay calculated according to the basic cost of living in the UK: employers choose to pay this on a voluntary basis

C

An amount of money that is the least workers must be paid per hour according to the law

D

A one-off payment (often annual) if the organisation has done well or as a ‘thank you’ for good performance

E

Pay often used for casual work: the envelope that the pay is received in details the amount earned and any deductions

FPay linked to how well you do, e.g. value of sales, often as a top-up on a basic salary

G

Additional payment (usually annual) whereby employees receive extra pay based on a percentage of the company’s profits



Student Sheet 1.2Understanding a payslipLook at this payslip and write in the labelled boxes a description of what each numbered item is. The first one has been completed for you as an example.

Company Name:

Department Payment method: BACs Payment period - monthly

Totals this period Amount Deductions Amount Gross pay Amount

Basic 1 PAYE Tax 3 Totals year TD

Overtime 2 National Insurance 4 Total Gross Pay TD 7

Pension 5 Tax Paid TD 8

Student Loan 6 Nat. Insurance TD 9

Pension TD 10

Total Gross Pay 11

Date Tax Code Employee No. Nat. Insurance No. Employee Name Net Pay

12 13 14 15 16 17

Answers

1 The annual salary divided by 12 before any deductions

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

TD = to date



Student Sheet 1.3Understanding a payslip – answersLook at this payslip and write in the labelled boxes a description of what each numbered item is. The first one has been completed for you as an example.

Company Name:

Department Payment method: BACs Payment period - monthly

Totals this period Amount Deductions Amount Gross pay Amount

Basic 1 PAYE Tax 3 Totals year TD

Overtime 2 National Insurance 4 Total Gross Pay TD 7

Pension 5 Tax Paid TD 8

Student Loan 6 Nat. Insurance TD 9

Pension TD 10

Total Gross Pay 11

Date Tax Code Employee No. Nat. Insurance No. Employee Name Net Pay

12 13 14 15 16 17

Answers

1 The annual salary divided by 12 before any deductions

2 Any overtime payment due before deductions

3 The amount of tax to be deducted for this month’s wages, i.e. gross pay – tax allowance (£10,000) x 20% (for tax year 14/15)

4 The amount of National Insurance for this month’s wages, i.e. gross pay – allowance (£7,956) x 12% (for tax year 14/15)

5 The percentage of the salary paid into the pension fund (if there is one that the employee can pay into)

6 The amount of student loan deducted each month according to how much you are earning

7 The total amount of money earned since the beginning of the current tax year (often from 5 April)

8 The total amount of tax that has been paid so far in the current tax year

9 The total amount of National Insurance paid so far in the current tax year

10 The total amount of any pension contributions the employee has made

11 The total amount of pay earned this month before any deductions have been made, i.e. basic + overtime (if any)

12 The date salary is paid into the bank account

13 Tax code – allocated to you and given to the employer by the tax office (HMRC) so the employer can correctly calculate how much tax to deduct

14 A unique number allocated to the employee by the employer for record-keeping and tracking purposes

15 Unique number allocated to each individual by the DWP (Department of Work and Pensions)

16 The employee’s name

17 The amount of money that is transferred to the employee’s bank account for this month

TD = to date



Student Sheet 1.4Tax calculationsUse each person’s information to work out the amounts that would appear on a monthly payslip.

Use a calculator to help you.

Gross monthly pay Tax deduction NI deduction Net pay

James

Salary: £17,500

Tax code: 1000L

Sally

Salary: £20,000

Tax code: 822L (Sally was undercharged tax last year so her code has been adjusted and she must pay more this year)

Hamish

Salary: £14,500

Tax code: 1000L

Ishmael

Salary: £16,500

Tax code: 944L

Complete the calculations for the tax year 2014/2015.

The personal tax allowance is calculated as 10x the number given in the tax code.

The tax rate is 20% of any taxable pay.

National Insurance (NI) is calculated as 12% on earnings over £7,956.



Student Sheet 1.5Tax calculations – answersUse each person’s information to work out the amounts that would appear on a monthly payslip.

Use a calculator to help you.

Gross monthly pay Tax deduction NI deduction Net pay

James

Salary: £17,500

Tax code: 1000L

£1,458.33 £125.00 £95.44 £1,237.89

Sally

Salary: £20,000

Tax code: 822L (Sally was undercharged tax last year so her code has been adjusted and she must pay more this year)

£1,666.66 £196.33 £122.52 £1,347.81

Hamish

Salary: £14,500

Tax code: 1000L

£1,208.33 £75.00 £65.44 £1,067.89

Ishmael

Salary: £16,500

Tax code: 1000L

£1,375.00 £108.33 £85.44 £1,181.23

Complete the calculations for the tax year 2014/2015.

The personal tax allowance is calculated as 10x the number given in the tax code.

The tax rate is 20% of any taxable pay.

National Insurance (NI) is calculated as 12% on earnings over £7,956.

Money Skills: Money at work– Activity two | 11


Activity Two: Managing a projectTime needed: 45 minutes

Aims• To introduce students to some business terminology

• To help students understand how to work with a realistic budget on a business project

Key learning outcomes By the end of the activity students will have:• matched definitions to financial terminology

• completed a simulation activity in managing a work-based budget


Financial terms (one per group)

• Student Sheet 2.2: Organising a conference: Scenario (one per group)

• Student Sheet 2.3: Organising a conference: Information sheet (one per group)

• Student Sheet 2.4: Organising a conference: Spreadsheet formulae (one per student if using computers)

• Student Sheet 2.5: Organising a conference – answers (one for teacher)





Activity steps1. The language of business• Explain to the students that it’s helpful to have a good grasp of how businesses set

budgets for projects and operations to make sure they run to time and within the money set aside to run them (the budget)

• Ask the students how many of them are familiar with the concept of setting a personal budget (ask for a show of hands). Some may have completed the ‘Managing your money: Budgeting’ lesson where this is introduced

• Explain that before you work with finance and budget allocations, it’s good to have an understanding of the terminology of everyday business

• Divide the class into groups of four (or pairs if the class is small). Give each group a copy of Student Sheet 2.1 and ask them in their groups to discuss each one and identify which description fits each term. Explain that even if the words are unfamiliar, they should be able to work them out from the descriptions given. The answers are: A9, B6, C10, D8, E3, F5, G1, H4, I2, J7

• Ask the groups to share their results and go through the correct answers with them, explaining any terms that need clarification or where the students have questions

Extension ideaStudents could view the glossary resource from the Businessballs website. They can use this as a source of reference when they come across terminology at work they don’t understand: www.businessballs.com/finance.htm

Sheet 2.1



2. Managing a work budget• Ask the students if they have ever been involved in organising an event or a holiday for a

group of friends where what they’ve chosen to do has been limited by the money available to fund it. It is likely that some will have an example to offer but have one ready of your own, e.g. planning two weeks abroad within a fixed budget

• Ask for ideas about what you would need to think about and research if you were planning one of the examples offered and write any ideas on the board, e.g. travel costs, accommodation costs, spending money (costs of the event or trip) and funds available, e.g. contribution from each person, opportunities for finding extra money for the project

• Explain to students that in completing any activity that is going to cost money, you need to balance the costs against the capital available for the project to be a success. Explain that this is the same with any work-based project, and employers value people who understand how to manage and work within a given budget

• Explain to students that they’re going to complete an activity based on a real work scenario, where they are going to project-manage the setting up of a conference and work with a set budget

• Give each group a copy of Student Sheet 2.2 and Student Sheet 2.3. Ask them to read and discuss the scenario and then work together to complete the budget template. They will need to use the information sheet to select which items they will use and make sure they work within the budget. The idea is that they must make appropriate choices to meet the needs of the business and not go over budget

• Before they start the task explain that they will need to discuss and weigh up the best options. For example, explain that the cheapest isn’t necessarily the best. Use Student Sheet 2.5 as reference for issues that are likely to come up in discussion

• Ask each group to make a short presentation to the class justifying the choices they’ve made and detailing the total expenditure

Extension ideas• If you have access to computers with MS Excel, groups could use a spreadsheet to help

them manipulate the figures. Most students will be familiar with basic formulae but if needed there is a model to follow in Student Sheet 2.4

• If you have time and internet access, groups could research their local area to find the costs for three venues, hotels and print companies and use this information rather than the example given

Sheet 2.3

Sheet 2.2

Sheet 2.5

Sheet 2.4



Student Sheet 2.1Financial termsIn groups or with a partner, look at these financial terms and discuss what you think they mean. Write the item number next to the description it matches. You will be given the answers so don’t worry if some are unfamiliar.

Item

1 Credit rating

2 Limited liability

3 Budget

4 Cash flow

5 Fixed cost

6 Gross profit

7 Net profit

8 Variable cost

9 VAT

10 Capital

Definition Item No.

ATax charged when a registered business sells to either another business or to a non-business customer; the current rate is 20%.

B Sales minus cost of goods or services sold

CCurrent assets minus current liabilities: the money that can be put to work to earn income

D A cost that varies according to use, e.g. materials, fuel

EAn amount of money that is allocated to a particular activity or resource over a set period of time

FA cost that does not vary with changing circumstances, e.g. paying for a venue will cost the same regardless of how many people use it

GThe assessment given to borrowers by a ratings agency according to their level of risk

HThe movement of cash in and out of a business from day to day

I

Confines an investor's loss in a business to the amount of capital they invested: if a person invests £1,000 in a company and it goes out of business, they will lose only their investment and not more

JNormally refers to profit after deduction of all operating expenses including fixed costs and overheads



Organising a conference: Scenario Jemima works for a company that specialises in PR (public relations) via social networking. The company director wants to organise a conference where he will speak about the benefits of promoting a business.

Jemima has been asked to take on the organisation of the event.

Income from the event must cover all the costs. Jemima needs to choose a suitable venue, book lunch and refreshments and print a pack of information for each delegate to receive on the day.

A guest speaker has been invited who won’t charge a fee but will need overnight accommodation the night before as she has a distance to travel. Jemima needs to include this expense and book an appropriate hotel.

• Using the information Jemima has gathered, discuss and decide what options Jemima should choose to ensure the costs are covered. Complete the spreadsheet with the appropriate information

• On the list of items that need to be paid for, identify which costs are fixed and which are variable

• Work out what the running costs will be in total

• It is predicted that a maximum of 50 people will attend the conference. It has been agreed that the attendance fee will be £25 per person. Calculate how much income this will generate if 50 places are filled

Student Sheet 2.2

Expenditure Number of items Cost Total F/V*

Room hire

Refreshments during the day

Lunch

Hotel

Printing

Total expenditure

*indicates fixed/variable cost

Income Bookings (No.) Price Total

Bookings taken (assume 50)

Total income Total expenditure Money remaining



Organising a conference: Information sheet Student Sheet 2.3

Jemima has done some research and picked three options that meet her requirements. She wants her company to make a good impression on delegates so she is looking for comfortable accommodation with room for people to circulate.

The Business Centre The City Hotel The Stiles Conference Centre

• Room can accommodate 80• Free parking available • Light & airy room with windows• Unlimited tea/coffee: Free• No equipment charge• Room hire fee: £300

• Room can accommodate 100• Free parking available 500m away• Basement room with limited natural light• Unlimited tea/coffee: £1pp• No equipment charge• Room hire fee: £250

• Room can accommodate 70• Limited free parking on site with free

off-road parking nearby• Light & airy room with windows• Unlimited tea/coffee: Free• No equipment charge• Room hire fee: £275

Jemima needs to provide lunch for the delegates. As this is a networking event she feels it’s important that delegates get the opportunity to talk to one another while they have lunch.

The Business Centre The City Hotel The Stiles Conference Centre

• Buffet lunch to include a selection of sandwiches, savoury pastries and salad, crisps, fruit platter and cupcakes

£15pp

• Buffet lunch to include a selection of sandwiches, fruit bowl and chocolate cake £10pp

• Seated hot meal in the restaurant £15pp

• Buffet lunch to include a selection of sandwiches, quiche and salads, crisps, fruit salad and selection of mini desserts

£13pp

Each delegate will receive a pack of information. This will need copying and inserting into a presentation folder. Jemima will ask a local print company to do the job for her as she doesn’t have time to do this herself. She sources quotes from three suppliers.

The Print Shop The Copy Centre The Stationery Store

• Printing, collating and provision of folder

• Including delivery to the venue£4 per set

• Printing, collating and provision of folder• Customer collects

£3.50 per set

• Printing, collating and provision of folder

• Customer collects£3 per set

Jemima needs to book a hotel for the guest speaker. She researches information about hotels close to the venue. These three are all within 5–10 minutes drive of all of the venues for the conference.

The Mercury Hotel 5* The City Hotel 4* The Dunberry Hotel 4*

• Executive room with dinner, bed & breakfast

• Free WiFi in room• Free parking on site

£150

• Double room, bed & breakfast• Free WiFi in lobby and bar• Free parking 500m away

£95

• Double room • Free WiFi in room• Free parking on site• Breakfast additional £15

£105



Organising a conference: Spreadsheet formulae If students have access to computers, it would be worth them completing their calculations in Excel as this would be more realistic for a work situation. They should be familiar with basic formulae but, if they need help, the table below details the formulae for the calculations required.

Explain that using formulae will allow them to input different combinations of costs to see which is the best one for their budget.

Student Sheet 2.4

A B C D E

1 Expenditure Number of items Cost Total F/V*

2 Room hire 1 =B2*C2 F

3 Refreshments during the day 50 =B3*C3 F

4 Lunch 50 =B4*C4 V

5 Hotel 1 =B5*C5 V

6 Printing 50 =B6*C6 F

7 Total expenditure =D2:D6 V

8 *indicates fixed/variable cost

9

10 Income Bookings (No.) Price Total

11 Bookings taken (assume 50) =B11*C12

12 Total income Total expenditure Money remaining

13 =D11 =D7 =A13-B13



Organising a conference – answers Students may find a well-reasoned alternative to this model answer. The important thing is that they begin to understand the issues to consider when making an informed decision about suppliers and needs versus budget restrictions.

Things they could consider are:

Student Sheet 2.5

Expenditure Number of items Cost Total F/V*

Venue hire (Stiles Conference Centre) 1 275 £275.00 F

Refreshments during the day 50 0 £0.00 F

Lunch 50 13 £650.00 V

Hotel (Dunberry, incl breakfast) 1 120 £120.00 V

Printing (The Stationery Store) 50 3 £150.00 F

Total expenditure £1,195.00 V

*indicates fixed/variable cost

Income Bookings (No.) Price Total

Bookings taken (assume 50) 50 25 £1,250.00

Total income Total expenditure Money remaining

£1,250 £1,195 £55.00

VenueThe Stiles Conference Centre:• room a good size and is light and airy• restricted parking a disadvantage

but not enough of a problem to outweigh the higher cost of the Business Centre, which has parking

• the lunch is good value

Business Centre:• potentially a classier venue but cost

is over budget• room a bit too big

The City Hotel:• basement room with no natural light

so may not feel so welcoming

Printing The Stationery Store is best option for price and, as customer collects, Jemima has an opportunity to check everything is correct and can ensure it’s all there on the day.

HotelThe Dunberry is the best option as it’s good value, has WiFi available and has on-site parking for convenience and safety.

Money Skills: Money at work– Activity three | 19


Activity Three: Self-employmentTime needed: 45 minutes

Aims• To introduce students to the idea of working for themselves

• To make students aware of the tax implications of self-employment

Key learning outcomes By the end of the activity students will have:• completed calculations for income, expenditure, tax and National Insurance for self-

employment

• explored the pros and cons of being self-employed


Working for yourself: Scenario (one per group)

• Student Sheet 3.2: Working for yourself: Expenditure (one per group)

• Student Sheet 3.3: Working for yourself: Income (one per group)

• Student Sheet 3.4: Working for yourself – Answers (one per teacher)

• Money Skills: Money at work PDF Presentation Slides





Activity steps1. Pros and cons of self-employment• Discuss with students the idea that they may, at some point in their working life, want to

be self-employed or work for an organisation as a freelancer or as a sub-contractor. (See footnote for definitions.)

• Explain that the principles of running any small enterprise or working freelance are the same when it comes to working with a budget to ensure profitability

• Ask students to spend a few minutes discussing in their groups what they think the advantages and disadvantages are of being self-employed. Ask students to note down their ideas during their discussion and to be ready to share them with the class

• Compare the results between the groups asking for one contribution from each group in turn, writing a list on the board until there is nothing more to add. Show PDF Presentation Slide MW3.1

• Now ask the groups to think about what the challenges of self-employment might be when it comes to finance. Offer them one or two suggestions to get them started, e.g. needing capital, needing to earn a living

Footnotes:

Self-employed: working for yourself by offering a service or product and being responsible for your own tax and insurance affairs.Freelance worker: declared to tax office as ‘self-employed’, working for organisations on an ‘as needed’ basis.Sub-contractor: a person or organisation hired to provide a service or deliver a project on behalf of another organisation.

2. Rules of self-employment• Explain to students that if they wanted to take on freelance work or set up their own

enterprise, they would have to take responsibility for their own tax and National Insurance contributions. Explain that the amount they would be taxed would work in the same way as if they were employed but, rather than the employer deducting their tax each time they’re paid, they would need to declare their self-employed earnings and fill in a tax return itemising what they’ve earned over a year

• Highlight that not declaring your earnings for tax purposes or failing to provide an honest account of your income is an offence that can lead to heavy fines and, in extreme cases, prison (for tax evasion). Emphasise the importance of registering for self-employment with HMRC and keeping good accounts. Mention that, although it can sound intimidating, it can be very straightforward if managed properly

• Ask the group how they could ensure they had enough money to cover their tax bill. The response should be to save the right percentage of their earnings each month in a savings account (preferably one that will pay some interest) so that it’s available when the bill comes in

• Explain to students that currently if you save at least 20% of everything you earn in a savings account each month you would have sufficient to pay your tax bill at the end of the financial year at the basic rate of earnings and tax. Explain too that if your earnings go over a certain amount, you pay a higher proportion of tax. Information on current levels of tax can be found on the HMRC website

MW3.1PDF



3. Keeping straightforward accounts• Introduce the next activity by explaining to the students that they’re going to work

together in groups to explore the scenario of a freelance designer. The principles of the accounts and how the designer works would apply to any vocational area, e.g. a freelance plumber, mechanic or mobile hairdresser

• Show PDF Presentation Slides MW3.2 and MW3.3 and talk through how the tax and NI insurance calculations work in these examples

• Give out Student Sheets 3.1, 3.2 and 3.3. Explain that, in their groups, they are going to discuss the scenario and explore a simple set of accounts, taking a look at how this freelancer works for different companies, invoicing them for her time. They should use the information in the accounts spreadsheets and fill in the blank total boxes

• Ask them in their groups to answer the questions and work out how much this freelance designer has earned in the tax year and complete the estimates for tax and NI

• Go through the answers to the activity with the groups and compare their results. The answers are provided in Student Sheet 3.4

4. Top tips for self-employment• Ask the groups to spend a few minutes discussing and agreeing some top tips they

could give to anyone considering self-employment to help them manage their finances successfully

• Ask for contributions and ideas from each group in turn, writing them up on the board as you discuss them. Show PDF Presentation Slide MW3.4 to summarise. Talk through any items on the list that haven’t already been discussed

Sheet 3.3

Sheet 3.2

Sheet 3.4

Sheet 3.1MW3.2

PDF

MW3.3

PDF

MW3.4PDF



Lora

Working for yourself: ScenarioLora graduated with a good degree in fashion design two years ago and has been working as a freelance designer for several different companies since graduating. She has been lucky in building up regular work for different organisations. Her work is mostly done at the clients’ premises so she has to travel but she likes the flexibility of working on a range of projects.

Lora has been very careful to keep her accounts as she goes along, recording all expenditure and income on a spreadsheet. She’s coming to the end of her first year of self-employment and wants to work out roughly how much tax she will need to pay on what she’s earned over the year.

Lora is registered as self-employed with the Tax Office (HMRC) so she will need to complete a self-assessment tax return each year. She will also need to pay National Insurance which, for self-employment, is charged at 9% on any profits over £7,956 (these are called NI Class 4 contributions).

Student Sheet 3.1

Working in your groups, look at Lora’s budget spreadsheet and fill in the missing information. Then discuss and answer the questions.

1. What is Lora’s total income for the year?

2. Lora is allowed to put all her business mileage down as an expense at the mileage rate set by HRMC for the tax year. This is currently 45p per mile. What is Lora’s total claim for mileage?

3. What is the total for all expenditure for the year?

4. Lora has a tax code of 1000L. Based on the figures she has recorded on her spread-sheet, how much tax can Lora estimate she will pay?

5. What will be the estimate for National Insurance contributions?

6. What is Lora’s predicted net profit (i.e. what she will earn after expenses and tax are deducted)?



Working for yourself: Expenditure Student Sheet 3.2

Expenditure Quantity Cost (£) Total

April

Mileage 130 0.45 £58.50

Promarker pens 6 2.75 £16.50

Mobile phone contract 1 25 £25.00

Letraset sketchpad 1 10 £10.00

Subtotal £110.00

May

Mileage 70 0.45 £31.50

Postage 3 6.5 £19.50


Subtotal £76.00

June

Mileage 130 0.45 £58.50


Subtotal £83.50

July

Mileage 70 0.45 £31.50


Subtotal £56.50

August

Mileage 200 0.45 £90.00




Subtotal £136.00

Sept

Mileage 70 0.45 £31.50

Postage 4 3.45 £13.80


Subtotal £70.30

Expenditure Quantity Cost (£) Total

October

Mileage 130 0.45 £58.50

Software licence renewal 1 36 £36.00


Printer cartridges 4 18.75 £75.00

Subtotal £194.50

November

Mileage 70 0.45 £31.50

Postage 3 4.2 £12.60


Subtotal £69.10

December

Mileage 130 0.45 £58.50


Subtotal £83.50

January

Mileage 70 0.45 £31.50


Subtotal £56.50

February

Mileage 175 0.45 £78.75




Subtotal £146.75

March

Mileage 70 0.45 £31.50

Portfolio file 1 36 £36.00


Subtotal £92.50

Total expenditure £



Working for yourself: Income Student Sheet 3.3

Income

Client No. days Day rate (£) Total

AprilHigh St Design Co 8 150 £1,200.00Shoe Mania 3 100 £300.00Courtlands 4 125 £500.00Subtotal £2,000.00MayHigh St Design Co 8 150 £1,200.00Shoe Mania 3 100 £300.00Courtlands 4 125 £500.00Subtotal £2,000.00JuneHigh St Design Co 4 150 £600.00Shoe Mania 3 100 £300.00Courtlands 4 125 £500.00Subtotal £1,400.00JulyShoe Mania 3 100 £300.00Courtlands 4 125 £500.00Subtotal £800.00AugustHigh St Design Co 6 150 £900.00Shoe Mania 2 100 £200.00Courtlands 2 125 £250.00Merry & Co 2 80 £160.00Subtotal £1,510.00SeptHigh St Design Co 8 150 £1,200.00Shoe Mania 2 100 £200.00Courtlands 2 125 £250.00Subtotal £1,650.00

Total income

Total expenditure

Taxable income (income – expenditure – personal tax allowance)

Estimated tax payable (@20%)

Estimated NI payable (@9%)

Net income

Income

Client No. days Day rate (£) Total

OctoberHigh St Design Co 8 150 £1,200.00Shoe Mania 3 100 £300.00Courtlands 4 125 £500.00Subtotal £2,000.00NovemberHigh St Design Co 8 150 £1,200.00Shoe Mania 3 100 £300.00Courtlands 4 125 £500.00Subtotal £2,000.00DecemberHigh St Design Co 4 150 £600.00Shoe Mania 2 100 £200.00Courtlands 1 125 £125.00Subtotal £925.00JanuaryShoe Mania 2 100 £200.00Courtlands 2 125 £250.00Subtotal £450.00FebruaryHigh St Design Co 6 150 £900.00Shoe Mania 1 100 £100.00Courtlands 2 125 £250.00Merry & Co 6 80 £480.00Subtotal £1,730.00MarchHigh St Design Co 8 150 £1,200.00Shoe Mania 3 100 £300.00Courtlands 4 125 £500.00Subtotal £2,000.00

Total income £



Lora

Working for yourself – answers1. What is Lora’s total income for the year? £18,465.002. Lora is allowed to put all her business mileage down as an expense at the mileage rate set by HRMC for the tax year. This is currently 45p per mile. What is Lora’s total claim for mileage? £591.753. What is the total for all expenditure for the year? £1,175.154. Lora has a tax code of 1000L. Based on the figures she has recorded on her spreadsheet, how much tax can Lora estimate she will pay? £1,457.975. What will be the estimate for National Insurance contributions? £656.086. What is Lora’s predicted net income (i.e. what she will earn after expenses and tax are deducted)? £15,175.80

Student Sheet 3.4

Expenditure

April 110.00

May 76.00

June 83.50

July 56.50

August 136.00

September 70.30

October 194.50

November 69.10

December 83.50

January 56.50

February 146.75

March 92.50

Total Expenditure 1175.15

Total income £18,465.00

Total expenditure £1,175.15

Taxable income (income – expenditure – personal tax allowance) £7,289.85

Estimated tax payable (@20%) £1,457.97

Estimated NI payable (@9%) £656.08

Net income £15,175.80

Figures for spreadsheets

Income

April 2,000

May 2,000

June 1,400

July 800

August 1,510

September 1,650

October 2,000

November 2,000

December 925

January 450

February 1,730

March 2,000

Total Income 18,465

Documents

Money Skills - assets-barclayslifeskills-production ... · Money Skills: Money at work– Activity one | 4 Moneyo SykilSskyyS:eCt Bcmoneyo Scgapr Activity steps 1. Getting paid at