Is tax % worked out forward or backward?

[UKSBD]

To simplify this I am using 20% as tax rate, 10% as employers NIC and 10% as employees NIC.

After all thresholds and other circumstances.
For the employee to end up with £100 does it cost the company £140
i.e.
£100 + 20% + 10% + 10% = £140

or does it cost the company £167 (approx)
i.e.
£167 - 20% - 10% - 10% = £100

[David Griffiths]

Neither, because employer NIC is not deducted from the gross figure. Rouding everything to the nearest pound and using your figures, the employee salary would be £143, employee deductions £43 and employer NIC £14. So gross cost the the employer £157

I can't see why you wouldn't use proper rates for NIC and do the sums in a spreadsheet

[UKSBD]

so backwards for the employee part of the calculation and forward for the employers part
i.e
£143 - 20% - 10% = £100
£143 + 10 = £14

[Tom McClelland]

Quite hard to calculate from net to gross without software for the purpose. And the answer will depend on the employee's tax code.

What is the objective of the calculation? Are you trying to find out the total cost of someone who is paid net? If so then don't forget holiday pay, which like employer's NI adds another 12% on top.

[UKSBD]

Quite hard to calculate from net to gross without software for the purpose. And the answer will depend on the employee's tax code.

What is the objective of the calculation? Are you trying to find out the total cost of someone who is paid net? If so then don't forget holiday pay, which like employer's NI adds another 12% on top.


There is nothing to calculate and no objective to the calculation, was just interested if it was a + or - calculation.

[Andrew @ PLA]

Gross wage plus employers NIC equals total cost of an employee (for the purposes of the OP).