Gross Pay and Net Pay Flashcards

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  • Make sure you understand the information on each card. If something's unclear, click the link to the revision notes at the bottom of the page for more details.

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Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

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What is gross pay?

The total money you earn before any deductions. It includes basic pay, overtime and bonuses.

What is net pay?

The money you take home after all deductions from your gross pay.

How do you calculate net pay from gross pay?

Net pay = gross pay minus total deductions.

What is a deduction from pay?

An amount taken off your gross pay for things like tax, National Insurance or pensions.

Name two compulsory deductions in the UK.

Income tax and National Insurance contributions.

Give two examples of voluntary deductions.

Pension contributions and union fees.

What does a payslip show about your pay?

It lists your gross pay, each deduction and your net (take-home) pay.

Do overtime and bonuses change gross pay or net pay first?

They add to gross pay. Net pay only changes after deductions are taken.

If your gross pay is £1,200 and deductions total £250, what is your net pay?

£950.

Work out net pay: gross pay £500, income tax £50, National Insurance £40, pension £10.

Net pay = £500 – (£50 + £40 + £10) = £400.