Question

How do you work out wages cost to the business given Gross Pay, PAYE, Employees NI, and Employers NI?

a. Wages Cost = Gross Pay + PAYE + Employees NI + Employers NI
b. Wages Cost = Gross Pay - PAYE - Employees NI - Employers NI
c. Wages Cost = Gross Pay + PAYE - Employees NI - Employers NI
d. Wages Cost = Gross Pay - PAYE + Employees NI + Employers NI

Answer 1

The wages cost to the business is calculated by subtracting the PAYE from the gross pay and then adding the employees' NI and employers' NI.

Step-by-step explanation:

The correct answer is d. Wages Cost = Gross Pay - PAYE + Employees NI + Employers NI. The wages cost to the business is calculated by subtracting the PAYE (pay-as-you-earn tax) from the gross pay and then adding the employees' National Insurance (NI) and employers' NI.

For example, if the gross pay is $100, the PAYE is $20, the employees' NI is $5, and the employers' NI is $10, then the wages cost to the business would be $75 ($100 - $20 + $5 + $10).

This formula takes into account the deductions from the employee's wages (PAYE and employees' NI) and the taxes paid by the employer (employers' NI), providing an accurate calculation of the overall wages cost to the business.