Challenge the Chancellor 2010 - Level 2 Competition Tasks

Here are the details of the two tasks that need to be completed by teams entering the Level 2 version (e.g. GCSE) of Challenge the Chancellor 2010:

Please note: tntries for the competition are to be made using the official online submission form - details of which will be made available shortly.

SATURDAY JOB TAX TRAP
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Part 1
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Mike is in Year 11 and has been working in his local supermarket for the past two months. He does six hours per week each Saturday and gets paid at a rate of £5 per hour. This is his first job ever. When you tell him it must be great to be getting £30 a week he admits that actually they have only been giving him £24.00 because of the income tax. He says he’s asked about it but they have told him that he is on an “emergency code” because he didn’t give them a P45 form and he will probably get a tax refund sometime. Mike is going to give up his job at the end of March 2010 to concentrate on his GCSEs and won’t look for another job until July 2010.

Assume that it’s December 2009 now and that Mike started work in October 2009 just after his 16th birthday.

You can see a copy of Mike’s recent payslip here

Questions:

1. Should Mike be paying tax? Explain why or why not.

2. What tax form should the supermarket have completed when Mike first started work?

3. Who will pay Mike his tax refund if it comes through before he leaves his job in March 2010?

4. If his tax refund isn’t sorted out by the time he leaves his job in March 2010, what will he have to do to get his refund?

5. Why doesn’t Mike have to pay National Insurance Contributions even though he has been charged income tax?

Part 2
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Write a short e-mail (300 words max) to Alistair Darling, the Chancellor of the Exchequer with your suggestions for a better system for sorting out the tax for people with jobs who are still at school.