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I am trying to learn how to calculate the NET payment for a partial month and the overtime (net and gross) based on some random payments and facts I found from the past. I got stuck with a specific one because one month is split into two different contracts. Also, I was not able to find the way to calculate the NET overtime directly. So, the facts of the problem are shown below:

  • The annual salary is 23000 gross payment.
  • The gross overtime payment is 11.05 per hour.
  • In September, the overtime hours were 10.5 hours.
  • In October, the overtime hours were 48 hours.
  • In October, the contract with the 23k salary stopped on the 13th. A new contract was set to be based on an hourly payment of 11.05 per hour where there hours are fixed to 8 per day.

So, my findings so far:

  • The NET payment for September should 1608.52 according to the UK salary calculator.
  • The GROSS overtime payment for September should be 116.025 pounds (10.5 * 11.05).
  • The GROSS overtime payment for October should be 530.4 pounds (48 * 11.05).
  • The NET payment for October (until the 13th) should be 890.88 pounds (74.24 * 12) where 74.24 is the daily payment according to the UK salary calculator. I am not sure if the calculation is correct. I assume you take the NET daily and multiply it by the days worked. It is 12 days as for that month people had to work during the weekends too.
  • The GROSS payment for October (after the 13th) should be 884 pounds (80 * 11.05) where the total hours were 80.

I am not sure how to calculate the NET overtime payment in order to find out the exact amount needed to be paid for October and then September.

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  • Haven't you already been paid for those months? Are you trying to check if your net pay was calculated correctly?
    – GS - Apologise to Monica ♦
    Dec 7, 2021 at 1:00
  • I am trying to see if it is correct, yes. And learn how to calculate it so that I make an Excel file in the future.
    – Datacrawler
    Dec 7, 2021 at 13:26

1 Answer 1

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The effective tax rate on your overtime pay will not be the same as the effective tax rate on your basic pay because you normally get some tax free allowance. If you are paying any tax on your basic pay, then obviously this allowance has been used up and hence you will pay tax on all of your overtime pay. Something similar applies with National Insurance.

So the proper way to do this is calculate the nett pay on your standard gross, then calculate the nett pay on your pay including the overtime and subtract the two figures.

E.g. Assuming your gross monthly pay is 1916 and the overtime is 116

Calculate the nett payment on 1916. Calculate the nett payment on 1916 + 116 Subtract these figures to determine the nett due to the overtime.

This method should apply to all cases regardless of your tax code and which Tax/NI band you fall into. However in your case, it is likely that you will be paying 20% Tax and 12% NI on your overtime pay.

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