Income tax help

To help a visiting French pal…

If an employee gets £300 pw gross, what does the employer pay on top of this?

Kickbacks, protection etc.

Al,

Employers DON’T pay income tax on their employees salary. They DO pay Employers national insurance contributions at 13.8% of gross salary.

Does that help?

Cheers, is that all?

You do mean gross and not net?

Employers DON’T pay income tax on their employees salary.

But if they operate PAYE, they do have to collect it and pay it to HMRC.

Hence my request for clarification

£19.87 Er NI*. £300 less £156 x 13.8% Er NI.

NI Rates

The company may be entitled to £2000 per annum Employers Allowance which the Er NI would be offset against

Employers Allowance

You also need to allow for holiday pay accrual as a cost

Cheers, is that all?

Some employers consider that a significant burden. There is an argument that without it, for every seven employees in the company the employer could afford one more (whether that would be the likely outcome is an interesting debate). Alternatively it might mean they could lower prices by the equivalent margin (which in a consumer market with VAT on top would be 16.5% total) or that they could make bigger profits on which they should then be paying c. 22% corporation tax. As a general rule imposing taxes on employers for giving people work is not a good way to grow your economy.

If as Scotroutes alludes to your friends question is actually about how much tax HE pays and the employer collects on his behalf, then assuming he is earning £300/wk and earns for all 52 weeks in the tax year then:

Gross = £300
Income tax – £19
Employees NI – £17

Take home = £263

So his employer takes £36 from him, adds on their own 13.8% (£41.40) and pays the government a total of £77.40.

Still think 13.8% is low – when its more than the employee is paying in earnings based tax themselves?

Gross.

Why less £156?

EDIT I didn’t mean I thought it was low poly, just checking. In France its 100% I am told. How many businesses have only employee costs? 8-P

Employers NI starts on earnings at £156.01 and above

As per @craig, overall it’s quite complex with varying rates / bands etc. Yes taxes / NI here are far lower than their equivalents in France.