Grossed up tax and Ni

JaffasGirl

A friend of mine has come to me with a query, and I have no idea what the answer is!

She has just got her pay slip for this week and in the taxable earning section of her payslip there is a line saying 'grossed up tax and Ni' and then an amount. I have done a small bit of googling and it seems to be related to benefits in kind, does this sound right? I know that the company recently had a work meal that was paid for by the company, would this count as a benefit in kind?

Any help you could give would be great, her manager is awful at answering questions!

Thanks!

zara5034

I doubt that 1 company meal would be classed as a benefit in kind, there is a limit on how much each employee is allowed when it comes to company meals, cant remember the exact figure though. Are there any other benefits provided?

Does she get Net to Gross, where the Net figure is agreed and then grossed up?

JaffasGirl

No idea, I haven't seen the actual pay slip.

Sorry if it's obvious, but I take it by that you mean, it's agreed that the employee is paid for example £200 a week, and then any tax is added on to give the gross figure, instead of the other way round?

Are there any other explanations? There may be more benefits, she works for Pret if anyone knows how they work?

NeilH

Hi

When I've dealt with "gross ups" before it has usally been a case whereby an agreed net amount is to be paid and then grossed up so that after tax and NI the net is the agreed amount.

As an example, where I currently work the guys on the alarm callout list get £25 per call out. For a standard rate tax payer this is grossed up to approx. £36.76 so that after deductions the take home is £25.

Is your friend on a net pay agreement?

Neil

JaffasGirl

Im not sure, as i havent seen the pay slip. She did say that the figure given in the 'grossed up' bit didnt match the NI and tax that she pays, should it? i think she just gets paid an hourly rate, like normal, but i can check.

Are there any other reasons for this? even if they would be uncommon?

Thanks

zara5034

Not that I know of. Net to Gross is the only one. Sometimes, it may be that only part of the payment is Net to Gross, for example, a bonus, therefore meaning that part of the payment is gross and part is net.

JaffasGirl

Ah ok, so if they get a bonuses for example '£50' for doing well in a mystery shopper, they would need to add the tax to that, as the bonus is £50 not £50 minus tax...or am i reading what you said completely wrong lol

I think shes just a bit worried, her boss is not really aware of what it means, and although im sure Pret wouldnt be doing any weird things with her pay, she was a bit concerned that her boss seemed to have no idea about it. I did tell her to call the head office, and that they should be able to explain it to her.

* or did you mean that she would get paid a £50 bonus say, and the 'grossed up Tax and NI' is the tax part of her bonus? so she would get £50 minus the tax?

NeilH

JaffasGirl wrote: »

Ah ok, so if they get a bonuses for example '£50' for doing well in a mystery shopper, they would need to add the tax to that, as the bonus is £50 not £50 minus tax...or am i reading what you said completely wrong lol

That's how I would see it. As I think I mentioned, we give staff who get called out when the burgular alarm goes off £25 but we gross this up to approx £36.76 so that after tax and NI they get £25.

Neil

zara5034

Yes, I agree Neil, it may be laid out as 'Bonus' £25.00 'Grossed up Tax and NI' £11.76.

Does that make sense?

JaffasGirl

Yes it does, I know they get a lot of bonuses there. Thanks so much for your helps guys, I shall now let her know that she's got nothing to worry about! AAT forum to the rescue! Lol