Higher gross, less net?

Lasai · 01-02-2019 5:39am #1

Hello everyone,

I believe this is the right sub-forum to be posting this question but if it's not, I'd appreciate if a mod could let me know.

Today I received one of the quarterly bonuses we get at work with the payslip for my 2 last weeks of work.

I'm surprised as I'm getting a higher gross but a lower net than the last time we got this bonus about 3 months ago. Keep in mind the ESPP deduction is a Employee stock purchase plan we have in the company I work for so it shows up as a deduction but I receive it afterwards, so the net would really be €3,979.54 and €3,902.6 respectively.

I can't really understand why I'm getting a higher gross but a lower net:

- Gross is only higher by 1.23%
- PRSI and tax I'm paying are also up by 1.23%
- USC I'm paying in the second one is up by 42.9% though. Why is this?

I don't mind the difference to be honest, €75-80 won't make much of a difference to me but I'm just curious as of why am I paying so much more in the second payslip. Please see the image below.

Thanks!

Avatar MIA · 01-02-2019 5:55am

Has your tax credits / tax bands changed. Distributed differently compared to last year?

Revenue have shaken up tax credits since the change to payroll tax reporting.

Peregrinus · 01-02-2019 6:14am

USC rates have actually gone down slightly in 2019 so, yeah, at first glance this is puzzling. Your USC for the first month of 2019 looks excessive to me; by my back-of-the-envelope tot it should be 306.09.

Lasai · 01-02-2019 7:28am

Avatar MIA wrote: »

Has your tax credits / tax bands changed. Distributed differently compared to last year?

Revenue have shaken up tax credits since the change to payroll tax reporting.

Not that I'm aware of. I've read USC went down from Jan 1st so I was quite surprised when I saw the payslip

Peregrinus wrote: »

USC rates have actually gone down slightly in 2019 so, yeah, at first glance this is puzzling. Your USC for the first month of 2019 looks excessive to me; by my back-of-the-envelope tot it should be 306.09.

That's the amount I was thinking of

Any other ideas will be more than appreciated

Peregrinus · 01-02-2019 7:50am

Well, this could be just an old-fashioned mistake - they do sometimes happen. Ask your company's payroll office to show the calculation.

cdeb · 01-02-2019 7:55am

Is it because it's an early-year bonus? With only two months' tax credits/USC bands/etc, a bonus could push you more into the higher bands than if you get it later in the year. In that case, that'll fix itself in the coming months.

Impossible to answer for sure though without knowing USC bands

Peregrinus · 01-02-2019 8:14am

cdeb wrote: »

Is it because it's an early-year bonus? With only two months' tax credits/USC bands/etc, a bonus could push you more into the higher bands than if you get it later in the year. In that case, that'll fix itself in the coming months.

Impossible to answer for sure though without knowing USC bands

USC bands are readily available on the Revenue website.

Applying the 2019 bands, I calcuate the USC due as 306.09, which accords with OP's own calculation. It's possible that we're bothing making the same mistake, but whatever is causing this, I don't think it's the bands.

CIARAN_BOYLE · 01-02-2019 8:18am

1st of February. I presume this is your second payroll of the year. perhaps there was a bloopers the other way with the first payroll of the year and this is a correction on thr cumulative basis.

exaisle · 01-02-2019 8:30am

2 things...youre paying an awful lot of paye tax. Are your tax crefits and bands restricted?
Secondly, the reason you're paying more USC is that payroll is projecting your income to be higher than 70,000 for the year so its calculating the portion of projected income above 70,000/12 at 8%. Next month might see a correction on the USC front but if it doesnt then seek a p21 via My Account as soon as possible in 2020.

Lasai wrote: »

Hello everyone,

I believe this is the right sub-forum to be posting this question but if it's not, I'd appreciate if a mod could let me know.

Today I received one of the quarterly bonuses we get at work with the payslip for my 2 last weeks of work.

I'm surprised as I'm getting a higher gross but a lower net than the last time we got this bonus about 3 months ago. Keep in mind the ESPP deduction is a Employee stock purchase plan we have in the company I work for so it shows up as a deduction but I receive it afterwards, so the net would really be €3,979.54 and €3,902.6 respectively.

I can't really understand why I'm getting a higher gross but a lower net:

- Gross is only higher by 1.23%
- PRSI and tax I'm paying are also up by 1.23%
- USC I'm paying in the second one is up by 42.9% though. Why is this?

I don't mind the difference to be honest, €75-80 won't make much of a difference to me but I'm just curious as of why am I paying so much more in the second payslip. Please see the image below.

Thanks!

Peregrinus · 01-02-2019 8:35am

exaisle wrote: »

...Secondly, the reason you're paying more USC is that payroll is projecting your income to be higher than 70,000 for the year so its calculating the portion of projected income above 70,000/12 at 8%.

But that was the position also with the October payment - he was well into the 8% USC bracket, and the October USC was calculated on that basis. So that can't account for the difference between the October and February calculations.

exaisle · 01-02-2019 8:40am

No...we dont know what the Actual cumulative totals were in october. The payroll effectively thinks that the feb salary is going to continue every month up to december 2019 whereas in october 2018 it "knew" what the actual figures were for most of the year.

Peregrinus wrote: »

But that was the position also with the October payment - he was well into the 8% USC bracket, and the October USC was calculated on that basis. So that can't account for the difference between the October and February calculations.

Peregrinus · 01-02-2019 8:47am

I don't think so. The October figure is pretty spot on for the OP having reached the 8% bracket in every pay period up to October - there is at most only a couple of euros adjustment for unused brackets from previous pay periods.

And the February figure (which I think is the first figure for 2019) seems to me to be excessive. It actually doesn't matter in this calculation what you assume his pay in future will be; based on his pay to date for 2019 and the 2019 allowances he was into the 8% bracket and the USC should have been 306.09. He might have got some of that back in future months if his pay was significantly lower, but there is no assumption you can make about future pay which would produce a higher figure for February than 306.09.

exaisle · 01-02-2019 9:01am

I wonder if OP would share their cumulative income, tax credits and COP so one of us can run the figures through a payroll system?
I still suspect that the system is overestimating the amount of usc payable at 8% because the bonus has been paid early in the year..

Peregrinus wrote: »

I don't think so. The October figure is pretty spot on for the OP having reached the 8% bracket in every pay period up to October - there is at most only a couple of euros adjustment for unused brackets from previous pay periods.

And the February figure (which I think is the first figure for 2019) seems to me to be excessive. It actually doesn't matter in this calculation what you assume his pay in future will be; based on his pay to date for 2019 and the 2019 allowances he was into the 8% bracket and the USC should have been 306.09. He might have got some of that back in future months if his pay was significantly lower, but there is no assumption you can make about future pay which would produce a higher figure for February than 306.09.

cdeb · 01-02-2019 9:14am

I've just done a quick calculation and come up with USC of €446.48?

This is as below -

USC band	USC rate	 USC
 462.00 	0.50&#37;	         2.31 
 302.38 	2.00%	         6.05 
 1,929.62 	4.50%	         86.83 
 4,391.07 	8.00%	         351.29 
 Total		                 446.48

I'm presuming pay frequency is fortnightly.

The actual figure of €435.99 is slightly lower, presumably because the OP has unused 4½% credits from previous periods.

And as per my earlier post (and exaisle's), I would say the reason it's higher this time is because you're "on target" to earn a lot more than you did last year, given that it's two pay periods in and you've already gotten a bonus - if you were to earn seven grand every fortnight, your annual salary would be €182k. But of course, you won't be getting this bonus every time, so the USC will adjust over the coming weeks.

There's no difference in PAYE presumably because your base salary takes you into 40% anyway, so the bonus is all at 40% either way. But in Jan 2019, more of your bonus is at 8% USC than in Oct 2018.

Peregrinus · 01-02-2019 9:26am

OK, if the OP is paid fortnightly, this calculation works.

But I did my calculation on a monthly basis, and got the same answer as the the OP got, which suggest that he did his calculation on a monthly basis, which suggests that he is paid monthly.

Also, the October 2018 calculation is correct, if done on a monthly basis.

Here's a thought: OP, has the basis of your pay changed from montly to fortnightly?

Or, has payroll mistakenly calculated your deductions on a fortnightly basis, while in fact you are paid monthly?

cdeb · 01-02-2019 9:41am

I don't think it needs the pay frequency to have changed.

First off btw, you can't calculate USC on the 2018 pay without knowing how much was paid in previous periods. Same as you can't calculate PAYE just with reference to one month.

The pay in 2018 could have been fortnightly too, but because the bonus was so late in the year, there could have been unused USC credits from the previous pay periods which would have reduced the tax. But in 2019, those unused tax credits are effectively in future months, and so the same levelling off will occur in coming periods.

I'm assuming pay is fortnightly based on this in the OP -

Today I received one of the quarterly bonuses we get at work with the payslip for my 2 last weeks of work.

It could also be then that if the employee left employment on, say, 14th Jan, that only two insurable weeks are being allowed, and so that's why pay is effectively being done on a fortnightly basis this time.

Stheno · 01-02-2019 9:42am

Peregrinus wrote: »

OK, if the OP is paid fortnightly, this calculation works.

But I did my calculation on a monthly basis, and got the same answer as the the OP got, which suggest that he did his calculation on a monthly basis, which suggests that he is paid monthly.

Also, the October 2018 calculation is correct, if done on a monthly basis.

Here's a thought: OP, has the basis of your pay changed from montly to fortnightly?

Or, has payroll mistakenly calculated your deductions on a fortnightly basis, while in fact you are paid monthly?

Op posted that his Pay slip was for the last two weeks

cdeb · 01-02-2019 9:43am

No, for his two last weeks, not for the last two weeks.

Potentially a big difference, as per my post above (which crossed with yours)

Lasai · 01-02-2019 10:12am

CIARAN_BOYLE wrote: »

1st of February. I presume this is your second payroll of the year.

Third one, we get paid every two weeks

exaisle wrote: »

youre paying an awful lot of paye tax. Are your tax crefits and bands restricted?

Not that I'm aware of. Is there any way for me to calibrate the amount of tax I'm paying if I pay too much right now?

exaisle wrote: »

I wonder if OP would share their cumulative income, tax credits and COP so one of us can run the figures through a payroll system?

This is the year to date in the last payslip I received in 2018, from Dec 21st in case it helps:

cdeb · 01-02-2019 10:32am

OK, well if you get paid every two weeks, then it's what myself and exaisle have said - you've more of your bonus subject to the higher USC rates because it's early in the year and you don't have unused credits built up yet.

You've calculated your USC based on the USC bands divided by 12 - but it should be the bands divided by 26 (as there are 26 fortnightly pay periods). That then gives the calculations per my earlier post.

You should see your third period pay - assuming it's the same as the first period pay - has less USC deducted as a result.

Lasai · 01-02-2019 10:48am

cdeb wrote: »

OK, well if you get paid every two weeks, then it's what myself and exaisle have said - you've more of your bonus subject to the higher USC rates because it's early in the year and you don't have unused credits built up yet.

You've calculated your USC based on the USC bands divided by 12 - but it should be the bands divided by 26 (as there are 26 fortnightly pay periods). That then gives the calculations per my earlier post.

You should see your third period pay - assuming it's the same as the first period pay - has less USC deducted as a result.

Fantastic, thanks a million everyone for all the help!

Higher gross, less net?

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