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Level 1 · Topic 2

Money & Finance

Wages, deductions, percentage changes, simple interest, profit & loss

Wages and deductions

Pay can be calculated in different ways. Hourly pay means you multiply hours worked by the hourly rate. Annual salary can be divided by 12 for monthly pay or 52 for weekly pay.

Deductions are amounts taken off your gross pay (pay before deductions) to give your net pay (take-home pay). Common deductions include Income Tax and National Insurance.

Net pay = Gross pay − Total deductions
Hourly pay × Hours worked = Gross pay
Overtime: normal rate × 1.5 (time and a half)

Percentage discounts and increases

At Level 1 you apply percentage changes in real contexts — VAT, discounts, pay rises and price increases.

VAT
Usually 20% added to price
Discount
% off the original price
Pay rise
% increase on salary
Multiplier
× 1.2 for +20%; × 0.8 for −20%
💡 VAT: To add 20% VAT, multiply by 1.20. To find the pre-VAT price when you know the VAT-inclusive price, divide by 1.20.

Simple interest

Simple interest is calculated only on the original amount (the principal), not on any interest already earned. It is used for some savings accounts and loans.

Simple Interest = (Principal × Rate × Time) ÷ 100
Total = Principal + Interest
💡 Example: £500 at 4% per year for 3 years: SI = (500 × 4 × 3) ÷ 100 = £60. Total = £560.

Profit and loss

Profit is made when you sell something for more than it cost. Loss is when you sell for less than cost.

Profit/Loss = Selling price − Cost price
% Profit/Loss = (Profit or Loss ÷ Cost price) × 100
💡 Remember: Percentage profit/loss is always calculated on the cost price, not the selling price.
1Calculating take-home pay
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Amir earns £18.50 per hour and works 37 hours a week. He pays £92 in tax and £58 in National Insurance. What is his weekly take-home pay?
  1. 1Gross pay: £18.50 × 37 = £684.50
  2. 2Total deductions: £92 + £58 = £150
  3. 3Net pay: £684.50 − £150 = £534.50
✅ Weekly take-home pay = £534.50
2Adding VAT
▼
A plumber charges £240 for labour. He adds 20% VAT. What is the total bill?
  1. 1VAT amount: 20% of £240 = £48
  2. 2Total: £240 + £48 = £288
  3. 3Multiplier: £240 × 1.20 = £288 ✓
✅ Total bill = £288
3Simple interest
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Priya invests £1,200 in a savings account at 3.5% simple interest per year. How much interest does she earn over 4 years? What is the total amount?
  1. 1SI = (P × R × T) ÷ 100 = (1200 × 3.5 × 4) ÷ 100
  2. 21200 × 3.5 = 4200. 4200 × 4 = 16800. 16800 ÷ 100 = £168
  3. 3Total: £1,200 + £168 = £1,368
✅ Interest = £168  |  Total = £1,368
4Profit and percentage profit
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A trader buys a bicycle for £80 and sells it for £116. Calculate the profit and the percentage profit.
  1. 1Profit: £116 − £80 = £36
  2. 2% profit: (36 ÷ 80) × 100 = 45%
✅ Profit = £36  |  Percentage profit = 45%
5Overtime pay
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Kezia earns £12 per hour. She works 35 normal hours and 4 overtime hours at time and a half. Calculate her total weekly pay.
  1. 1Normal pay: 35 × £12 = £420
  2. 2Overtime rate: £12 × 1.5 = £18 per hour
  3. 3Overtime pay: 4 × £18 = £72
  4. 4Total: £420 + £72 = £492
✅ Total weekly pay = £492
6Finding the original price (reverse percentage)
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A TV costs £360 after a 10% discount. What was the original price?
  1. 1After 10% off, the price is 90% of the original.
  2. 2So: original × 0.90 = £360
  3. 3Original: £360 ÷ 0.90 = £400
✅ Original price = £400
Question 1
Tom earns £15.20 per hour and works 40 hours. He pays £85 tax and £48 NI. What is his take-home pay?
Question 2
A sofa costs £650 plus 20% VAT. What is the total price?
Question 3
£800 is invested at 5% simple interest per year for 3 years. How much interest is earned?
Question 4
A car bought for £6,000 is sold for £4,500. What is the percentage loss?
Question 5
A price after a 25% discount is £150. What was the original price?
Question 6
Layla works 35 hours at £11/hr and 6 overtime hours at double time. What does she earn?
Question 7
A business buys goods for £2,400 and sells for £3,000. What is the percentage profit?
Question 8
Annual salary of £31,200. Monthly tax £340, NI £210. What is the monthly take-home pay?
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