Calculating Net to Gross for wages.

Ballymackeonan

I use a program called Calcpay for wages and it will do calculations from net to gross. You can download it as a test program for 3 pay periods, so you would be able to do a check using it.

Pumpkinface_2

MoKa wrote: »

I know this is an old thread, but I thought I'd add another reason why you MIGHT want to calculate gross to net.

I am currently calculating my household outgoings now versus what they will be once we complete a planned reduction in household costs. To put this into perspective, I want to work out how much better off i'd be, and liken it to the equivalent pay increase I would require to get the same benefit. Obviously the amount I save will be a net amount, after deductions, etc, so in order to see the true value of the savings as an equivalent 'pay rise', I need to gross it up.

As an example, with nice simple (and not at all realistic figures):

If I were earning £20/hour and my potential saving in the cost saving exercise was £100 per week, I wouldn't just have to work 5 hours to earn that £100, as that would be how much I would get AFTER tax. Using the link that was posted above (and manipulating the salary amount to work it backwards), I've worked out that £100 grossed up would actually be £146, which is actually more than 7 and a half hours extra to earn that £100 net.

So, the benefit of working out a net to gross figure is that I can see I would have to work 50% more time (7.5, not 5 hours) to earn the same amount of net pay after tax.

It's far easier.

To bring home an additional £100 you would need to earn £125 if a 20% tax payer or £166.66 if you are a 40% tax payer.

125 x 80% = 100 and
166.66 x 60% = 100

I cannot imagine how you came up with £146 as I don't see a link. Perhaps you are right on the edge of the tax band.

(I have not considered NI but it would be just as straightforward)