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splitting my tax code(14 Posts)
Help please, I am looking at a couple of possible jobs at the moment that would work together, one being 3 1/2 days the other 1 1/2 days, I will want to split my tax code equally between the families and have advised them both to use nannytax to make this easier, the question I have is to earn in total £425 a week, £275 from one and £150 from the other both nett does anyone know what roughly I will need to agree as a gross figure as I think I may of advised one of the families a wrong amount at the weekend.
Why do you want to split the tax codes... I wouldn't do it that way, as you will be agreeing a Gross salary with each employer. Also your tax office may not agree to doing a split tax code. TaxNanny has some info about tax code splits.
You are not doing a nannyshare, unless you are caring for the children from both Family A and Family B at the same time. Therefore it is two separate employments and in my view you should allocate all your tax allowance to the job which pays the most.
What I would do is start off with the figure of £30,000 annual gross salary. That is a bit over £425 net per week. It's a nice round number basically!
Divide by 10 to give £3000 and multiply by the number of 1/2 days... so Family A 3.5 days, £21000 Gross. Family B £9000 Gross
Family A use your tax allowance. So £21,000 Gross becomes about £16,413 net.
Family B do tax on the entire salary - £9,000 Gross becomes about £6,840 net.
Therefore your total net wage is around £23,253 which divided by 52 is a little over £447.
Hi Nick thanks for that, I assumed if I was working for two families during a week then I would need to split my tax code, but your way sounds much easier.
How would I find out how much it would be gross for the second family to pay me if they are looking at £10 net a hour, with no tax allowance.
Going from Net to Gross is not easy. Some of the accounts packages will do it - thus why the payroll agencies use packages like Sage Payroll.
Can you negotiate a gross wage? The employers should not be negotiating NET wages with you, as they will need to operate PAYE using Gross salary.
If you are working 15 hours a week for family B, then work out the total hours per year, probably 780.
Then start with say £12 per hour Gross. So 780 x £12 = £9360
Put that figure in ListenToTaxman and it calculates Net pay as £7088. £7088 / 780 = £9.08
Keep playing with the figures to get to the one you want.
£13.40 Gross per hour is a little over £10 net per hour, using taxcode BR, 09/10 tax year.
Thanks Nick, yes I want to use gross to discuss wages with them, but as normal they quote net via the agency. Trying to see if I can do 11 hours with one and 33 with another family and if it will work out enough money to be earning or not.
I would say that you need to make sure you can live on the pay from the 33 hour job. Then the additional from the 11 hour job is your money for saving, pension, holidays etc.
Agencies should know better than to be quoting net wages for part-time jobs. There are some agencies who only quote Gross wages... but alas such agencies are few and far between.
We're in a similar situation to the parents you will be working for. We currently split the tax code but are working roughly equal hours (slightly more for us.) Our hours will be decreasing in Sept when the other mother returns to work, but we are still getting a portion of the tax code. I would never agree to it otherwise, nor would I think it would be fair to do that to another family. The costs go up A LOT for the family that doesn't have any of that allocation.
nannytax sorted out our code share for us.
The costs don't go up for the family, if they have agreed a GROSS wage... the payments they deduct from the nannies Gross wage are more, than they would be if personal tax allowance was being used. Employers NI is the same, regardless of the tax code in operation.
If the family has agreed a NET wage then yes there can be big cost differences... thus why I always recommend to employers to agree Gross wages.
Speaking as an employer, and an accountant, I agree with Nick - gross is best for everyone. Tax code splits are a crazy way to deal with a problem that doesn't exist if you agree gross salaries.
Okay, this is what is bizarre because I kept saying this to the other family and to Nanny Tax. It WOULD got up if we weren't receiving any of her allowance. We are currently paying £X per week gross. If we weren't sharing the allowance it would be £x+ 19% more.
However - the nanny wanted to receive £8 per hour net. So we grossed that up and that figure is in her contract as her gross weekly pay. There is no reference to £8 net per hour in the contract, so we are protected in that regard. If you see what I mean. But it does reflect working back from a net figure.
From what I understand, the gross figure is one thing, but there is still a certain portion of her yearly wage which accrues at a lower tax rate. And if you don't agree to share this portion of the tax relief between families we will pay more.
Or are Nanny Tax confused???!
If you look at the bottom of the page on TaxNanny is that the kind of split you are doing? Looking at the TaxNanny example, it looks to me as though the Gross salary is 50/50 split between the two employers. This results in the NET salary not being a 50/50 split, as one employer is deducting more Employees Tax than the other. But the overall cost to each employer is the same.
Looking at the Tax Nanny example, my thought is that the Employees NICs figure may be wrong, but I've not done a spreadsheet of it yet using current tax/nics tables. But even if that is the case, then I don't expect the difference to be 19%.
Hmm... think I may try to do a spreadsheet of this kind of scenario. I am wondering where the 19% difference occurs, if it does occur. Maybe I'm missing something... just wondering what?
Tax doesn't have to be complicated - is that HMRC's strapline on their ads? - but it complex!
TO be very precise, it would be something like 18.76% more.
More of what though? More income tax, more of employees nics?
I can see that the second employer would be deducting more Employees Tax and Employees NICs but in turn they give the nanny less take home pay. Maybe that is what NannyTax means... you pay more to HMRC... but it doesn't cost you more, as you don't pay the nanny as much after deductions. This is assuming the Gross salary has been split between the two employers.
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