Gross pay – the total amount earned, before tax, national insurance and other deductions.

HMRC - Her Majesty’s Revenue and Customs, formerly known as the Inland Revenue and HM Customs and Excise.

Income tax - the tax levied on the earnings of individuals.

IR35 - the HMRC tax legislation which seeks to determine whether an individual is self employed and can be remunerated by way of dividend and salary, or whether an individual is employed and is paid a salary only basis (all subject to tax and National Insurance contributions).

Net pay – the remaining amount of income after tax, national insurance and other deductions have been made from your salary.

NIC – National Insurance Contributions.

P11D – the HMRC (Expenses and Benefits) form that is filled in by UK employers for each director and employee earning over £8,500 per annum, detailing any expenses and benefits in kind received by the employee.

PAYE – Pay-As-You-Earn, the payroll deduction system whereby income tax and National Insurance Contributions (NIC) are deducted from an employee’s salary. The amount deducted is established by their tax code and is designed to try to collect the correct amount of tax on NIC over the tax year.

Umbrellas – these companies contain an unlimited number of contractors all receiving a salary and paying PAYE and National Insurance. Some expenses are tax deductible. Contractors are not shareholders so cannot receive dividends.