Wednesday, 13 August 2014

Ref BenJamin Post...as for VAT so for employment taxes

I want to increase an employee's pay by £2,000 per annum from £23,000 to £25,000. That is an extra £166.67 per month gross = £113.33 net to him.

So how much does that cost me? Calculation from our book keeper:

Current cost per month is £1,916.66 + £173.01 = £2,089.67

Total cost per year £25,076.04.

Cost per month would be £2,083.33 plus Employers NIC £196.00 Total per month £2,279.33

Total cost per year £27,352.00.


So, I spend £2,276 and employee gets £1,360. Employment tax = £916.

Why does anyone bother?

9 comments:

Staffordshire man said...

Are you sure your figures are corrrct

Lola said...

@ SM. Checking.....

Lola said...

No. Spanking book keeper now....

Will delete post later.

ThomasBHall said...

Can you just update the figures rather than delete? Where is the error?

ThomasBHall said...

figures look right to me (using a UK tax calculator)

Lola said...

TBH; MW corrected them....

Staffordshire man said...

Still wrong

Mark Wadsworth said...

SM, all right, what do you think the correct figures are?

You can use this handy calculator

http://www.listentotaxman.com/index.php

thethoughtgang said...

The post is confusing because at the very end it flips from considering the additional cost to the employer of a gross salary increase (i.e. just the employers NIC), to the total tax take (difference between total cost to the employer and the net receipt by the employee.

So the figures are correct, but it all reads badly because that penultimate sentence kinda comes from nowhere as prior to that we were only thinking about one element of the employment tax.