The very many questions-not-worth-their-own-thread question thread XXVII

[Hygro]

There's no way this actually just happened.

 

[aimeeandbeatles]

Is there a thread to post interesting videos? I searched and I didn't see one on the first few pages.

 

[Cheezy the Wiz]

"What are you watching on Youtube" is probably the best thread for that, even if it's not technically a Youtube link.

BTW welcome back Aimee!

 

[aimeeandbeatles]

OK thank you.

 

[Yeekim]

Does anyone from UK know whether there is an online calculator somewhere that would show the total cost (for an employer) for paying someone a net salary of x?

Failing that, could you simply provide a calculation: if someone takes home a salary of 1000 EUR (~870 GBP) each month, how much would the total cost for employer be?

 

[Arakhor]

No idea, sorry. Maybe the DWP website might have something.

 

[really]

http://www.hmrc.gov.uk/payerti/forms-updates/more-tools.htm
Her Majesty's Revenue and Customs have various tools.
You need to know certain things like the individuals tax code and eligibility for credits and the like.
Don't forget to apply both tax (Pay As You Earn) and National Insurance to get the net.

 

[Arakhor]

That seems like a much more relevant site.

 

[Borachio]

Doesn't it work out at something around double the salary? Still, £870 a month is fairly low, so maybe a lot less than double. I don't know. I just like guessing at stuff.

(Think of a number. Double it. Yeah, good enough for me.)

Spoiler :

Was the number you thought of 23? 27? 184? Nope. I give in. What was it?

 

[Yeekim]

Thanks for all the responses, but I really couldn't make heads or tails out of those tools
Anyone feel brave enough to see if he can coax an answer out of them somehow?

 

[brennan]

AFAIK The only (routine) extra cost to the employer is their liability to extra National Insurance Contributions. The relevant Class 1a rate looks like it is currently 13.8%.

So

Doesn't it work out at something around double the salary?

Would be a rather hefty over-estimate.

 

[GinandTonic]

The double it thing is the rule of thumb for working out how much a person needs to bill to clients to cover their costs. It includes management, secretarial, marketing, admin, rent etc. So lawyers used to be expected to bill two and a half times their salary - once for them, once for overheads for the company and half for profit for the partners. I gather it's three or three and a half times these days. Obviously different industries would have different ratios, but billing twice what you take home is a basic rule of thumb.

The NI is the only thing an employer would have to directly pay, so somewhere in the region of £1400. With a ten grand tax free allowance £4-500 would be taxable, so if you want them to have the cash in their pocket add another hundred or so.

Edit - Actually you would need to add a bit more for employee NI contribution.

 

[Zelig]

Does anyone from UK know whether there is an online calculator somewhere that would show the total cost (for an employer) for paying someone a net salary of x?

Failing that, could you simply provide a calculation: if someone takes home a salary of 1000 EUR (~870 GBP) each month, how much would the total cost for employer be?

Probably depends on profession, area etc., people in a field should be able to give you a good idea.

Rule of thumb here for software dev is $10k/person/month cost to employer.

 

[Takhisis]

But, Zelig, how much of that $10k does actually go into the employee's pockets?

 

[cardgame]

Starting pay for a software dev is approx 60k IIRC so depending on experience and living conditions I'd put it to 50-75%

 

[Zelig]

But, Zelig, how much of that $10k does actually go into the employee's pockets?

Depends how good the employee is at negotiating.

cardgame's generally in the right ballpark.

I mean, I'm pretty good at negotiating, but I also use a whole bunch of company resources (thousands in each of computer equipment, software subscriptions, conference/travel costs, certifications/resources, hundreds in food) that I don't receive in salary or direct financial (government deductions, insurance, savings matching, etc.) benefit.

It's in the company's best interest to buy me personal-use software subscriptions to play with on my own time instead of giving me more money to spend on cocaine.

 

[Yeekim]

Still not quite what I was getting at ... allow me to demonstrate using an Estonian example.

Spoiler :

To take home 1000€ per month, an employee would have to have a monthly salary of ~1278€ - from that employer would withhold an income tax (rate is 21%, but first 144€ are tax-free), unemployment insurance (2%) and pension fund downpayment (another 2%).

Moreover, on that 1278€ gross salary, employer would have to pay 33% social tax and another share of unemployment insurance (1%).

So the total calculation (ignore rounding errors) looks like:
Total cost for employer: 1713
- social tax: 422
- unemployment insurance: 13

Gross salary: 1279
- unemployment insurance: 25
- pension fund: 25
- income tax: 227
Net salary taken home by employee: 1000 €
(This calculation ignores 28 days of paid leave, for simplicity's sake).
So, I'm not after employer's overhead costs like admin, rent or whatever.

If I understand brennan right, the only direct payment the employer would have to make on top of gross salary is a NI contribution of 13,8%.
So the missing variable is: how large must employee's gross salary be to take home a 1000€ ( 870£) after whatever taxes there are?

 

[GinandTonic]

Take home pay £870

Annual take home £10440

Income tax at 20% after the first £10k

Employer NI at 13.8% I think after £7964 but not sure.

Employee NI at 12% after £7964

So £12k ish, but knowing where the employers NI contributions start could add to another thousand. But then there are lots of allowances for companies, so that could knock a bit off too.

 

[brennan]

Why would you be interested in comparing to the employee's net pay not their gross?

 

[Yeekim]

Why would you be interested in comparing to the employee's net pay not their gross?

Well, that's what matters from employee's POV...
Recently, there was an article by some entrepreneurs who complained that high employment taxes make it impossible for them to pay wages that would be competitive by European standards. I was just interested in finding out whether the total cost for employer they cited for UK was in the right ballpark.

EDIT: Thanks, GinandTonic, I guess you've pretty much answered it.