Salary Packages explained

The attractive sounding salary that you are being offered on the table is your 'gross' salary, the wage that actually goes into your bank account is your 'net' salary. Somewhere in the middle the taxman takes his cut, and you pay National Insurance contribution.

To compensate for tax loss and in a bid to woo high fliers away from the competition employers may offer further sweeteners on top of your basic salary.

These incentives can come in many forms for example, health schemes, a company car, or share options. There can be hidden costs with each of these, and their value may alter with stock market and interest rate fluctuations.

Serious consideration needs to be made when accepting anything on top of, or as a part of your salary because once you sign on the dotted line there is no going back.

It's the Tax Man

Managing your personal finance can be a full time job in itself. There is a wealth of information available about tax, insurance, and pensions but most of it is written in the form of incomprehensible jargon.

Regardless of whether you are new to employment or have been in work for many years it is very important to follow how much money is going into your bank account each month and more crucially how much is going out.

Income Tax is your contribution to Government spending. Everyone who earns or receives an income over a certain amount in the tax year pays income tax, and the more you earn the more you pay.

If you work for someone else, your employer will usually take the tax from your earnings each payday and pass it on to the Inland Revenue. This is known as 'Pay As You Earn' (PAYE).

It takes care of your tax automatically, and saves you having to pay tax in one go at the end of the year. An information leaflet is available from the Inland Revenue (IR34 'PAYE).