The Net to gross calculation utility allows you to determine what gross pay should be paid to an employee in order for the employee to receive a specific net pay figure. The payment made may be declared as subject to both Pay As You Earn and National Insurance contributions.
The option can only be run whilst the payroll type is unconfirmed.
Typical uses of this utility are to calculate payments for the purposes of:
Leavers
Jury service top up payments
To access the Net to gross calculation option:-
The Payroll Password form is displayed.
Enter your payroll password.
The PAYROLL menu is displayed.
Select the Miscellaneous options option.
The PR MISCELLANEOUS OPTIONS menu is displayed.
Select the Utility options option.
The UTILITIES menu is displayed.
Select the Net to gross calculation option.
The Net to gross calculation form is displayed.
The Net to gross calculation form is displayed when the Net to gross calculation option is selected from the UTILITIES menu.
What do you want to do or be advised about?
What processes should have been performed prior to using the Net to gross calculation utility?
The following processes should have been considered and successfully completed before using the Net to gross calculation option:
Confirm the tax and NI status of the payment to the employee by checking with your human resources department.
Ensure you have selected a correct printer for payroll purposes in condensed mode since the Net to gross calculation may print a calculate exception report.
Now proceed to complete the Net to gross calculation form.
Example of jury service top up payments
To top up the payment an employee receives from a court the employer has to increase the employee's gross pay by an amount that after the deduction of tax and NI will give the necessary additional net pay. Working out the gross pay is thus a use of the net to gross calculation utility.
Example
An employee normally receives 684.85 pounds gross pay for a 5 day working week for which the net pay would be 500 pounds or 100 pounds per day. For the first 10 days of jury service the maximum financial loss allowance available to the juror is 56.96 pounds per day.
How is the pay to be calculated if the employer is going to top up the pay so the employee receives their normal net pay?
Normal net pay is = 500
Juror allowance = 5 * 56.96 = 284.80
Net pay required = 500 - 284.80 = 215.20
Using the net to gross calculation utility for a standard week 1 / month 1 basis tax code, 503L and NI code A for 2006-2007 following the PAYE table update will generate the following figures:-
Gross pay = 265.75
PAYE tax = 31.99
Employee's NICs = 18.56
Net Pay = 265.75-31.99-18.56 = 215.20
Jury allowance = 284.80
Total Net Pay = 500.00
The employer should thus use Input pay details to enter either an A = Absolute method rate or addition/deduction payment to the value of 265.75.
Use of the Net to gross calculation form
Complete each of the fields and click OK. View the results on the right hand side of the form.
Employee number: The six digit employee number..
Tip: Click the Ellipsis button
to select an employee from the payroll records database.
Required net pay: The amount of net pay required.
Payment taxable: Tick this check box if the payment being made is subject to Pay As You Earn tax. Payment NI'able: Tick this check box if the payment being made is subject to National Insurance Contributions.PUSH BUTTONS:
OK: Proceeds to perform an iterative calculation process. The results are shown on the right hand side of the form.
Exit: Returns you to the UTILITIES MENU with no calculation being performed.
Help: Displays help on the current application in your default company browser.
The net to gross calculation process
An binary chop iterative calculation process is performed in order to home in on the required net pay. The process continues until either the following conditions are relevant:
The required net pay has been calculated
100 calculation attempts have been performed
The gross low figure has started to exceed the gross high figure and therefore no further logical calculations can be made.
The results of the calculation process are shown on the right hand side of the form. If the required net pay figure is calculated the Exact match check box is ticked otherwise it is unticked and the best match after 100 calculation attempts is shown.
A normal calculate period pay exception report may be printed.
What processes should be performed after using the Net to gross calculation utility
The following processes should be performed after using the Net to gross calculation utility:
If a calculate exception report has been printed on the selected printer read the report. Refer to the error message section of the Calculate period pay option for possible correction actions required.
- Use the Input pay details option to enter the required gross pay.
Calculate the pay using the selective option for the employee.
Use the print payslip preview option to check the calculation.
