TaxMatters. Your life as a taxpayer. Key Stage 4 lesson plan. Subjects. Resources and preparation. Lesson objectives. Introduction

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1 Income 1 of 6 Subjects Economic Wellbeing with Financial Capability (England) Personal and Social Education (Wales) Financial Education (Scotland) Learning for Life and Work (Northern Ireland) Financial Capability (Northern Ireland) Citizenship (England, Wales and Scotland) Lesson objectives Resources and preparation An interactive whiteboard or projector linked to a PC with an Internet connection Ideally, laptops or PCs for the class if not, you will have to show videos and conduct quizzes using the whiteboard Bookmark the Matters website: This lesson stands on its own but works well as the second in a series following discussion of National Insurance To help students understand the income tax system and how it will apply to them To look at different types of employment and the income tax they pay To ensure students have a good basic knowledge of their own tax obligations Introduction Students will no doubt be aware of income tax, even if it is just by listening to adults moan about it. Ask them what they understand about the tax system. Ask them how much tax they would expect to pay on a particular wage. Explain that the tax system may seem quite complicated but stress the need for getting tax returns and coding notices right. Outline the difference between being employed and self-employed and give some examples of tax deductible items people can reclaim against tax. Stress that, even if they don t like the idea, they will all have to pay tax if they get a job and need a good knowledge of the system to ensure they don t pay too much.

2 Income 2 of 6 Activities Start by looking through the Income factfile, either on individual PCs/laptops or using a projector at the front of the classroom. Individual work Get students to write down the following in their jotters: What does PAYE stand for? Who has to pay it? What is a personal allowance? What are the basic and higher rates of tax and what is the income cut-off between the two? (Don t forget to include the personal allowance when you calculate the total pay.) What does NIC stand for? Income Ice-breaker Show the payslip example to the class. Run through the explanations of the various terms and question the class to make sure they understand them all. Remind them that employees pay their Income and National Insurance contributions (NICs) through the PAYE system. Why are there two mentions of NIC in the Year to Date box? Look at the deductions: what advantages are there in paying money into an employee pension scheme? With a maximum student loan of 4400 a year (outside London), how long will it take Mr McGonagle to pay off his loan? Calculate what percentage of his wages Mr McGonagle takes home? What do students think about this? Classroom discussion Get students to look at the games section of the website. In pairs or groups, they should pick either Adam or Isabel s dilemma, discuss the problems and help sort them out. If there is time, they can also have a go at their second choice game. Whole class activity Discuss the advantages of being self-employed instead of working for somebody else. Do any of the class think they have skills they could use to become their own boss? Divide the class into groups and get them to watch Katie s story about becoming self-employed. They should make a list of the advantages and disadvantages of being self-employed as they watch. When finished, they should look at Pete s employment experience with the estate agency. Why was it important for Pete to know a little about the tax system? Discuss the advantages and disadvantages of both types of employment as a whole class exercise. Are there any other problems not mentioned by either Katie or Pete? Which type of employment would students like and why?

3 Income 3 of 6 Activities cont. Whole class/individual end-of-lesson Go to the Income quiz. Either run this as an individual activity students can challenge their friends or compete in groups or conduct as a whole class show of hands (or use activote software if available). Plenary Do students now feel confident about reading their future notice of coding and payslips? What do students think about the amount of tax they are going to have to pay? What will they expect to get for this tax? This session can also be used as a brainstorming session on how the government spends taxes in preparation for the next lesson on citizenship. Taking this further 1. Think of three jobs you may like to do when you leave school. Use the internet to find out the average annual wages for the jobs you have chosen. Now calculate how much income tax you will have to pay on each job don t forget to check what the allowances and tax rate bands are. What other deductions will you have to pay? See if you can calculate your take home pay each month. 2. Find out what the National Minimum Wage rate is for people your age, for people aged 20, and for people aged 22. Why does the UK have a National Minimum Wage? Find out whether there are national minimum wage rates in Spain, the United States, Germany and Poland. How do they compare? 3. Do you think rates of income tax in the UK are too high? Check the internet to find out what the rates of tax are in other countries around the world. 4. Look at the categories of people who have to complete a self-assessment tax form. Now go to to see the actual form. Would you like to fill one of these in? What advantages are there to filling in your tax return yourself?

4 Income 4 of 6 Curriculum information England (National curriculum) Economic Wellbeing with Financial Capability KS4 Pupils should be taught how to: manage their money explain financial terms and products identify how finance will play an important part in their lives Pupils need to understand: rights and responsibilities at work a range of economic and business terms Citizenship KS4 Pupils need to understand: the rights and responsibilities of consumers, employers and employees the economy in relation to citizenship, including decisions about the collection and allocation of public money Wales Personal and Social Education KS4 Learners should understand: how to become competent at managing personal finances their responsibilities as young citizens in Wales a range of economic issues related to their role as future providers and their responsibilities in personal finance

5 Income Learners should be given the opportunity to: interpret a variety of methods of presenting data to support understanding of PSE-related issues See also Citizenship links for England Scotland Financial Education Pupils need to: understand key financial and economic ideas be skilled in managing their financial affairs recognise the importance of using financial resources responsibly and must be prepared to: identify and tackle everyday financial issues and problems engage critically with economic issues Citizenship Pupils need to understand: the working of the economy and to develop: informed and reasoned opinions about economic issues Northern Ireland Learning for Life and Work KS4 Pupils should be enabled to: consider how employees and employers might maintain an effective working environment investigate the increasing social responsibility of business in the community 5 of 6

6 Financial Capability KS4 Pupils should learn how the economy functions and be developed as: contributors to society contributors to the economy Income 6 of 6