Net to Gross Wages

babsa

Lots of employers will benefit from the new tax code allowance for employees.

When the tax code was 647L an employee would have a gross of £308.65 to come out this a net pay of £250.00.

The tax code now is 747L an employee will now get a gross of £300.59 to still come out will a net pay of £250.00.

Why can employers get away with this or is it classed as an unauthorised deductions from wages?

slackda

erm,

not sure what you mean here, new one to me being paid on a net pay basis.

My salaries etc have alway been offered/agreed on a gross basis..

the above is completly legal if, that is what stated in a contact between an employer and employee that they will always receive x net salary

NeilH

Hi

Going on from what Slackda has posted, the example is quite an unusual one. Salaries and wages are usually quoted as a gross amount before PAYE is deducted, and thefore employees should be slightly better off. Although, after a quick "Google" it appears that private nannies may be in the habit of negotiating in net terms.

Normally employers simply collect the tax and pay it to HMRC and therefor it causes no gain or loss for the employer.

babsa

I process the wages for lots of little companies and not all of them will have a contract, The only person that benefits from any tax code changes is the employers and the employee still get the same take home pay. I get paid a net to gross and I have no contract. The tax code as changed from 543L 603L 647L and now 747L and I still get the same net pay. I only do a few hours a week and the different of £5.00 a per week would be nice in my pocket if my gross pay stayed the same.

Monsoon

So what you are saying is that employees are being paid less and less each year, as inflation means £250 or whatever the net is, is worth less and less each year.

Seems a good deal for the employer and a bit of taking advantage of the employee. Even if an employee doesn't get a raise they should at least benefit from the extra tax allowances!!!!!!!

It might be legal (don't know) but it's not moral.

coojee

But it does work in the employees favour when NI goes up (if they earn enough to pay NI) usually when the PA goes up NI goes up as well so what you gain with one hand you lose with the other. If you're paid net pay then it doesn't affect you. You can always negotiate a pay rise to offset the cost of living increase.

babsa

Monsoon, that's it. I asked an employer today about it to tell them based on the gross pay the employee should now get £255.49 and they said no keep it at the £250.
I ask all the time for more money from my employer and get nothing. I don't even earn that much. So this year i have rang the tax man and said please don't change my tax code. I explained the reason why and lucky me because I worked somewhere when ever they are short staffed. I've had my tax code split so come the end of this tax year I would of paid too much tax and i'll get a rebate paid to me. .

Monsoon

babsa wrote: »

Monsoon, that's it. I asked an employer today about it to tell them based on the gross pay the employee should now get £255.49 and they said no keep it at the £250.
I ask all the time for more money from my employer and get nothing. I don't even earn that much. So this year i have rang the tax man and said please don't change my tax code. I explained the reason why and lucky me because I worked somewhere when ever they are short staffed. I've had my tax code split so come the end of this tax year I would of paid too much tax and i'll get a rebate paid to me. .

On a pure tax planning point of view that's genius - and also shows how net pay just doesn't make sense. If someone was on code BR the employer would pay more possibly! And what about underpayments coded into the tax code? Employee on a K code?!?!

anniem

Being paid net is a pecularity within the domestic service sector.

If you look at all the nanny, house-keeper, butler, chauffeur employment agencies (the posh ones are all in London) and lots of the adverts placed in The Lady, you will find that the vast majority of them work on a 'Net Pay' basis.

It is a complete headache!

I have looked after domestic staff and they all expect to know what they are going to end up with in their pocket. Many of them are actually living in and have no other cost of living; accommodation, heating, laundry, food, vehicle, etc. all goes with the job!

There are some website calculators that do the net to gross calculation for you.

deanshepherd

Get your tax code changed to D0 and look forward to the juicy tax refund at the end of the year!

babsa

I deal with hair dressers, garages and I work in an office. All are on the basic 747L. I think if the employee was on a BR tax code the employers would change his mind on paying them net to gross as this would cost them more.