The Gross to Net report provides a breakdown of an employee's gross pay, deductions and net pay. It’s a detailed activity report that allows payroll professionals and employers to view the payroll breakdown over a given period of time. This means total wages and deductions can be compared by employee between pay periods.
What information is contained in a Gross to Net Report?
- Basic pay: This is the amount of money that an employee earns before any extra payments are added or any deductions are made to their earnings.
- Pre-tax adjustments: This could include things like overtime, commission, car allowance or bonuses – payments made to employees that are in addition to their basic pay.
- Gross Pay: This is the total amount of money that an employee earns before any deductions are made. It’s a combination of their basic salary, any overtime, bonuses, commission and/or any other payments that they’re entitled to.
- Deductions: These are the adjustments that are made from an employee's gross pay. Not all employees will be liable for the deductions as they’re applicable based on the amount of money that the employee earns. Deductions include:
o Income Tax: This is tax that’s deducted from an employee's pay based on their earnings. The amount of tax that’s deducted depends on the employee's tax code, which is calculated by HMRC based on their personal circumstances
o National Insurance contributions (‘NICs’): These are compulsory payments made by UK workers and employers that contribute for state benefits such as the state pension, maternity, paternity, sickness and bereavement benefits. The amount of NIC that’s deducted from an employee's pay depends on their earnings and their NI category.
For employed workers, Class 1 and Class 3 NICs apply. Class 1 NICs are payable by employees who earn over £242 per week and who are under the state pension age of 66 (rising to 67 between 2026 and 2028). Class 3 Contributions are voluntary contributions for people who want to fill gaps in their NIC record.
o Pension Contributions: If an employee is enrolled in a workplace pension scheme, they’ll have contributions deducted from their gross pay. The amount of these contributions depends on the scheme that they’re enrolled in, whether they’ve elected to make additional voluntary contributions and their earnings.
At the time of writing, the minimum contribution for employees enrolled in a workplace pension is 5% of their gross pay, including tax relief. Employers contribute equivalent to a minimum of 3% of the employee’s gross pay. They may contribute more, but 3% is the legal minimum.
o Other Deductions: There may be other deductions that are made from an employee's pay, such as deductions for student loan repayments, court orders or charitable donations.
- Net Pay: This is the amount of money that an employee receives after all the deductions have been made. It’s the amount that will appear in their bank account on payday and reflected on their payslip.
How is a Gross to Net Report Used?
The Gross to Net report is extremely valuable to both payroll service providers and employers alike. It provides details of each employee's gross pay, deductions and net pay for the period in question. It’s used to flag any changes by employee between the current and previous pay periods.
If changes between pay periods are flagged in the Gross to Net report, it allows the payroll service provider and the employer to check the employee’s payroll information to make sure that it’s correct.
Legitimate changes may happen to an employee’s pay between pay periods – they may have worked overtime or may have had their salary adjusted because of statutory payments. If an employee’s pay has changed between pay periods because they’ve received statutory sick pay (‘SSP’) instead of their normal salary, for example, this would be flagged in the report and could be checked and verified.
How does PayCaptain help?
PayCaptain has automation built in to the solution. The Gross to Net report is run automatically prior to sending the payroll over to the customer for approval. When the report is run, PayCaptain’s AI payroll assistant flags any variations in employee’s pay between pay periods that fall outside the acceptable parameters. These changes can then be checked by PayCaptain’s payroll team, verified and corrected if required.
Payroll is sent to the customer for final approval before running. PayCaptain customers have a full suite of reports available to them and can also run the Gross to Net report prior to approving payroll, should they wish to do so.
In summary, the Gross to Net report is one of the reports that PayCaptain runs automatically to ensure the accuracy of an employer’s payroll. It is one of the ‘checks and balances’ that’s available in the payroll solution and allows both the payroll team and the employer to compare pay calculations, by employee, between pay periods.
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