Explain the Difference Between Income Tax and National Insurance

The payslip has Income Tax and National Insurance both taken off and the total is more than you expected. They sound related but they are different things with different calculations and different purposes. This explains both in plain language, shows how each is calculated, and clarifies why your take-home is less than a simple percentage would suggest.

Explain the difference between Income Tax and National Insurance in the UK, for someone who has just started their first job.

Cover:
1. What each is, in one sentence each.
2. How each is calculated at the basic rates (current thresholds, not historical ones).
3. Who pays each (employee, employer, or both).
4. What each funds, in plain terms.
5. Why the take-home from a salary is lower than either deduction suggests when you look at them separately.

Use plain numbers where possible. Do not give tax advice.