gross wage

[iiiiiiiii]

If everyone agreed gross wage I'd be more inclined to but when I e.g. change one of my part-time jobs, I could lose out compared to what could get/other nannies, who would retain their net wage no matter how many more hours they work. Why would I give up significant extra £ if no one else is?

Anyway my point in favour of gross wages is all this tax under/over payment business that HMRC are into at the moment.

I received tax back for 2008-2009 and was about to work out who I needed to give what percentage back to but then realised if I then received something saying I owed tax for 2009-2010 it wouldn't be easy to get this paid by multiple families including one I no longer work for...

Now, I'm reducing my hours (by leaving one job) half way through tax year. seems like it would be very easy my tax to be over/under paid. Even with tax code uptodate, seems the employers I have just left might be owed some tax back relative to my reduced (non-tax qualifying) hours employer, i think .

There are numerous problems with agreeing a net wage - from the employers point of view. You have identified some of those... anything that could affect the tax code can have implications.

If an employer agrees a net wage with their nanny and then finds out that the tax coding is not normal - so for example it has been changed to pay back tax owed from previous years - then they are not going to be happy and may well try to renegotiate the pay. Legally I have no idea what the situation is there, if the contract only says NET pay. If the nanny did not agree to the new net pay... would the employer terminate the employer with notice?

Why can all nanny agencies tell nannies and nanny employers that nannies wages are Gross? I just don't get why the agencies won't/can't do that.

The cheque has my name on it and HMRC say they can't send to employer cos it is my personal tax/money, even if I tell them it isn't and my contract says so. You've got me wondering if net wages can be legal at all in that case- can't sign away your statuatory rights and all that. Does anyone know?

It would help if ANA insisted that member agencies only advertised jobs as Gross. While not all agencies are members... having more agencies advertise jobs as Gross is bound to help encourage Agencies, Employers and Nannies to think about Gross wages, rather than Net.

Your employer pays your Tax and NI on your behalf. So any under or overpayment of that is your responsibility... thus you get the refund cheque, or get asked to pay an owed amount.

HMRC don't deal with NET wages at all to my knowledge. Payroll companies calculate the Gross wage from the NET each payroll run. Payroll software can do that... I'd hate to think how tricky it would be to do manually. Anyone know... is it hard to do manually?

Tax law and employment law are different things. No idea if tax law mentions anything about Net pay agreements.

I have done it manually once or twice, but for someone with a "normal" tax code. Takes a while...

Think part of the reason I have refund is because it was done manually.

If you agree a net wage, you are going to miss out on the change in personal allowance from next tax year onwards.

By 2013, the personal allowance will be £10,000. If you do not agree a gross wage, your employer will be under no obligation to pass on the difference to you. They will simply pay less tax for you, ie. you will effectively be taking a pay cut.

Worth thinking about.

If you are employed by more than one employer and employes one uses all of your tax allowance, surely it doesn't matter if family 2 only ever deal with net figures?

I am self employed so only deal in gross figures and I find it annoying when agencies always quote "net per hour" figures. That isn't helpful to a SE person.

Page 23 of CWG2 says about Payments paid 'free of tax or NICs'

"the tax due is worked out by reference to the 'true gross pay', not the amount your employee is actually paid. It is your responsibility to work out the 'true gross pay' figure."

So the Employer has to calculate the True Gross Pay. HMRC issue a special tax table for doing this... I can't find it online, so I expect they must control who gets access to that special tax table. I keep coming across "(This text has been withheld because of exemptions in the Freedom of Information Act 2000)" whenever I find reference to Tax Table G on the HMRC website.

Another document FOT 1 is some notes about tax table G... only version I can find online is from 2005 - here (PDF) Note That version must not be used by anyone doing payroll calculations today!
The example shown on page 5 is interesting... as when using the Special Tax Table G, the tax due is more than it would have been if using some the other tax tables. I expect this is due to keeping things as simple as possible... as I have now found a specification for a computerised system which has 6 stages, different tax formulas, calculated to 4 decimal places and has rounding rules.

Thus I am not surprised that Employers agreeing a NET wage use a payroll company, as their payroll software will do the calculation as per the specification. Whereas a employer doing things manually will
use the Tax Tables which will be a simplified version and as per the example in the FOT1 I found online, result in slightly higher tax payable figure.

paulamkb: I think that 'net' would only not matter if I stayed with first family all tax year else some of my tax free allowance might still be up for grabs and might now go to me (at the end of the year) or indirectly to the second family (if they now adopt my individual tax code vs. BR)...though you could be right as my head hurts thinking about it.

To make things fairer/more complicated the families had a private arrangement where they shared my tax allowance based on me working a full tax year for both.

Actually does agreeing weekly salary undermine annual tax resonsibilities too?

Think part of the reason I have refund is because it was done manually.

Yes, I think so from what I have just been reading. Tax Table G is simplified... resulting in more tax payable than if it was calculated by a computer.

Payroll can be calculated Weekly or Monthly - so agreeing a Weekly salary I don't think makes a difference.

Blimey. Big thanks for all the research NN.
Why so enigmatic Special-Tax-Table-G? Especially given the complexity of the 6 stage specification. Surely there's an app for that...

The complexity of the calculation is there so that it comes up with exactly the same result as using the tables. It would be much easier if this requirement wasn't there, but this would lead to people with exactly the same pay and tax circumstances paying slightly different amounts of tax depending on whether their employer used a manual or computer payroll.

There are lots of apps for doing the calculation - every payroll program does it.

Working out gross pay from net is not easy because there is not just tax to take into account, but National Insurance as well. The Special Table G didn't do this so it was useless, which is why it is no longer provided by HMRC.

I wrote the software behind this calculator which does the net-to-gross calculation but it is not designed to do the weekly or monthly payroll calculation: I may add this if there is any demand.

link can't be found

try calculator.kistax.com

Oops thanks Nick - forgot my own site's address!

Calculator fun and useful. thanks.