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      Lesson details

      Learning outcome

      I can calculate tax.

      Key learning points

      1. Income tax is paid on any money earnt after your personal tax allowance
      2. National insurance is also only paid if you earn more than a certain amount
      3. Tax is paid on luxury goods. This is referred to as VAT.

      Keywords

      • Income Tax - Income Tax is tax that you pay on your income.

      • National Insurance - National Insurance is a tax on income which qualifies you to certain benefits, such as the State Pension and maternity pay.

      • Value Added Tax (VAT) - Value Added Tax (VAT) is a tax that is added to most products and services sold by businesses.

      Common misconception

      Income Tax is paid on the entire salary.

      Income Tax is only applied to the amount earned above the personal allowance.

      Teacher tip

      Pupils may enjoy investigating the different rates of Sales Tax in different states in the United States. They could create a presentation showing where it is cheapest to buy certain items.

      Content guidance

      Depiction or discussion of sensitive content

      Supervision

      Adult supervision recommended

      Licence

      This content is © Oak National Academy Limited (2025), licensed on Open Government Licence version 3.0
      except where otherwise stated. See Oak's terms & conditions
      (Collection 2).

      Lesson video

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      Prior knowledge starter quiz

      6 Questions

      Q1.
      Calculate 20% of 72

      Correct Answer: 14.4

      Q2.
      If you have 40 apples and 35% of them are eaten, how many do you have left?

      Correct Answer: 26

      Q3.
      A top originally cost £22. It is now on sale for £14. What is the percentage decrease in price (to the nearest percent)?

      Correct Answer: 36%, 36

      Q4.
      A store owner buys a pair of shoes for £45 and sells them for £105. What is the percentage profit (to the nearest percent)?

      Correct Answer: 133%, 133

      Q5.
      A house originally valued at £399 999 increase in price by 8.75%. What is its new value (to the nearest pound)?

      Correct Answer: £434 999

      Q6.
      An item that originally cost £37 is discounted by 18%. What is the sale price?

      Correct Answer: £30.34

      6 Questions

      Q1.
      Tax is tax that you pay on your income.

      Correct Answer: Income

      Q2.
      is a tax on income which qualifies you to certain benefits, such as the State Pension and maternity pay.

      Correct Answer: National Insurance

      Q3.
      (VAT) is a tax that is added to most products and services sold by businesses.

      Correct Answer: Value Added Tax

      Q4.
      The amount of money you can earn without having to pay Income Tax is called your ...

      additional rate
      basic rate
      higher rate
      Correct answer: personal allowance

      Q5.
      A store in the USA has a pair of sneakers on display. The price tag reads $41.99 and the Sales Tax is 15%. What do the sneakers cost?

      Correct Answer: $48.29

      Q6.
      A shop in the UK has a pair of trainers on display. The price tag reads £45.99 and VAT is 20%. What do the trainers cost?

      Correct Answer: £45.99

      To help you plan your 8 financial education lesson on: Taxation, download all teaching resources for free and adapt to suit your pupils' needs...