G2N Payroll Engine UK

G2N Nova stands out as the only Gross to Net Engine UK capable of delivering flawless and 100% accurate payroll calculations for the UK and over 100 other countries. This cutting-edge solution ensures seamless, real-time gross-to-net processing through a unified, native platform—without the need to access or store any personal employee data.

G2N Nova is the first payroll tax engine specifically designed to handle gross-to-net calculations for employees based on their nationality, including England, Wales, and Scotland. Our system ensures accurate, real-time payroll processing, providing tax updates for UK payroll in the cloud.

This innovative payroll technology efficiently handles intricate data privacy compliance regulations, ensuring that confidential employee information remains securely within the client’s systems. With G2N Nova, Gross to Net Engine UK, all payroll calculations are processed without requiring sensitive employee details, making it a secure and privacy-conscious choice for businesses worldwide.

The first gross to net payroll tax engine for UK

Looking for the latest payroll tax updates in the UK? Our G2N Payroll Tax Engine for the United Kingdom offers a cloud-based platform that provides real-time, continuous updates, tailored specifically for UK payroll. This seamless SaaS solution integrates effortlessly with historical payroll data and pay statements, ensuring you remain compliant and up-to-date. G2N Nova delivers exactly that—offering continuous tax updates and working with historical payroll data within your existing system, eliminating the need for manual updates or third-party integration.

Your Goals

• You don’t want to switch to an external payroll solution outside your HCM, ERP, or WFM software.
• You’re searching for a partner that offers a seamless, plug-and-play solution to handle payroll tax updates for the UK.

Solutions for the United Kingdom

• HCM/ERP/WFM: G2N integrates seamlessly with all major HCM, ERP, Time & Pay, and Attendance systems, allowing organizations in the UK to retain their existing infrastructure while automating payroll calculations. This ensures smooth processing and compliance without the need to overhaul your current systems.
• System Integrators: G2N empowers system integrators across the UK to effortlessly incorporate cross-border payroll capabilities into their platforms. As a powerful Payroll Tax Engine UK, it simplifies the management of international payroll and tax processes, enabling integrators to maintain full control over the user experience and provide tailored payroll solutions to their clients.
• Enterprises: Automate your payroll operations with G2N and say goodbye to processing complexities. Focus on what truly matters—growing your business, improving your products, or simply taking time off—while G2N handles all your payroll needs in the UK.
• SMEs: G2N is designed to scale with your business. Whether you have a team of 1 or 120,000 employees, G2N ensures real-time gross-to-net payroll calculations that evolve with your workforce and compliance needs. It’s a flexible and efficient solution, ideal for small and medium-sized businesses in the UK.
• Service Providers: G2N helps service providers streamline payroll processing, saving time and boosting efficiency. Trusted by Fortune Global 500 companies, our platform allows you to focus on delivering exceptional service to your clients while enhancing your bottom line.

How It Works

Input

• Employee Data: G2N Nova collects essential employee details such as compensation, benefits, and personal information.
• Leave: Tracks and processes employee leave, absences, and time-off.
• Time & Activity: Monitors employee work hours, attendance, and overtime.

G2N Nova Process

• Country Level Filing: Integrates with statutory authorities for accurate filing and reporting according to country-specific tax and social security regulations.
• Country Level Regulation: G2N Nova ensures full compliance with local payroll rules, supported by an in-house compliance team.
• Global Payroll Engine – Gross to Net Computation: The engine calculates gross-to-net payroll for employees, ensuring accurate pay and deductions in real-time.

Output

• General Ledger (GL): Provides detailed financial entries for accounting and reconciliation.
• Treasury: Generates reports for cash flow and treasury management.
• Bank File: Creates bank files for payroll payments and other transactions.
• Payslip: Delivers detailed pay slips showing deductions, taxes, and net pay to employees.

G2N Nova is built for flexibility, scalability, and compliance, offering a streamlined and secure solution to process payroll with ease across the UK and globally. It ensures smooth integration with existing systems and offers a real-time, transparent payroll experience for businesses and their employees.

Features of G2N Payroll Engine UK

Gross to Net Calculation

G2N Payroll Engine UK provides an accurate payroll calculator UK, ensuring precise gross-to-net pay calculations for employees, factoring in all deductions, taxes, and benefits.

Compliant with HMRC

G2N is fully compliant with HMRC, ensuring that all payroll processing follows the UK’s tax authority regulations, including real-time updates and accurate tax filings.

Data Privacy

G2N prioritizes data privacy, implementing robust measures to protect sensitive employee information and ensuring that personal data remains secure throughout the payroll process.

HMRC Integration – Automated API Integration

G2N Payroll Engine UK integrates directly with HMRC through automated API integration, ensuring seamless, real-time updates for tax calculations and compliance, reducing manual intervention.

GDPR Certified, SOC 1 & SOC 2 Compliant

G2N is GDPR certified and SOC 1 & SOC 2 compliant, adhering to the highest standards for data security and privacy, ensuring full protection of sensitive payroll information.

ISO 20000, ISO 27001, and ISO 27701:2019 Certified

G2N holds ISO 20000, ISO 27001, and ISO 27701:2019 certifications, demonstrating commitment to IT service management, information security, and privacy protection in payroll operations.

OWASP ASVS 3.0 Compliant

G2N is OWASP ASVS 3.0 compliant, ensuring strong application security practices to safeguard against vulnerabilities and protect employee data in the payroll system.

G2N Payroll Engine UK, with its payroll calculator UK and salary calculator UK, provides a secure, compliant, and efficient solution for processing payroll, giving businesses confidence in their payroll calculations while maintaining high standards of security and compliance.

Benefits

Employee details required to calculate Gross to Net Salary

To accurately calculate an employee’s gross to net salary, several key details are required. These include personal information such as the employee’s full name, tax code, and nationality, along with compensation data like base salary, bonuses, and overtime. Additionally, information about employee benefits, deductions (e.g., pension contributions, student loan repayments), and applicable tax rates is necessary. Accurate leave records, such as sick leave or vacation days, are also essential for a precise calculation. Gathering these details ensures that the payroll process is accurate and compliant with relevant tax and legal requirements.

Employer Name

The official name of the company or organization employing the individual.

Employer PAYE Reference

A unique reference number assigned to the employer by HMRC for Pay As You Earn (PAYE) tax purposes.

Employer Reference

An additional reference number that identifies the employer, used for reporting payroll information.

Payment from

The date or period when the employer made the payment to the employee.

Payment to

The recipient employee, indicating who the payment is made to.

Total Amount Paid

The gross amount paid to the employee before any deductions.

First Name

The employee's first or given name.

Surname

The employee's last name or family name.

National Insurance Number

A unique number assigned to each individual in the UK for tax and social security purposes.

Employee Reference Number

A unique identifier assigned to the employee by the employer, used in payroll systems.

Scheme Client Identification Number

A number identifying the client in relation to certain schemes (e.g., pension schemes).

Employee's Personal Identifier (PID) number

An alternative identifier used to track the employee in payroll systems.

NST Reference number

A specific reference number used for National Statistics or certain government reporting.

Monthly Amount Due

The regular payment amount the employee is expected to receive each month.

Actual Deduction

The actual amount deducted from the employee's pay for taxes, benefits, or other contributions.

Reason for Difference

The explanation for any discrepancy between the expected and actual deductions or pay.

Left Employment

Indicates whether the employee has left the company, which can affect the final pay and benefits.

Statutory Sick Pay

The government-mandated payment an employee is entitled to when they are off work due to illness.

Statutory Maternity Pay

The government-mandated pay provided to employees during their maternity leave.

Statutory Paternity Pay

The government-mandated pay for employees who are on paternity leave following the birth of a child.

Protected Earnings

The portion of an employee’s earnings that are protected from deductions, often due to legal or contractual requirements.

NRP Change of Income

A notification or record of any change in the Non-Resident Parent's income, relevant for child support or maintenance calculations.

Deceased

A note indicating that the employee has passed away, which affects final payments and benefits.

Minimum Drawing Rate

The lowest amount an employee can draw from certain benefits, typically related to pensions or savings plans.

Not Receiving Regular Pay

Indicates if an employee is not receiving their usual salary due to special circumstances (e.g., unpaid leave or salary adjustments).

Statutory Adoption Pay

The government-mandated pay for employees on adoption leave.

Add Stat Paternity Pay

A reminder or instruction to add statutory paternity pay to the employee’s pay.

Multiple Reasons

Indicates that there are multiple factors influencing an employee's pay, such as various leave types or deductions.

Redundancy

A situation where the employee is no longer needed by the employer, typically triggering redundancy pay or severance benefits.

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G2N provides payroll output, including the following

• Gross earnings: Total income before any deductions (e.g., salary, bonuses).
• Basic salary: The fixed amount paid to an employee before any additional pay or deductions.
• Pre-tax deductions: Deductions made before income tax is applied (e.g., pension contributions).
• Pre-NI deductions: Deductions before National Insurance (NI) contributions, such as salary sacrifice schemes.
• Taxable Income: The portion of income subject to income tax after allowances and pre-tax deductions.
• Income eligible for National Insurance deductions: The portion of income subject to National Insurance contributions.
• Income Tax: The amount of tax deducted based on income tax bands and allowances.
• National Insurance Contributions: Deductions for state benefits and pensions based on income, split between employee and employer.
• Post-tax deductions: Deductions made after income tax (e.g., union fees or voluntary contributions).
• Total Net Pay: The final amount the employee takes home after all deductions (income tax, NI, etc.).
• National Insurance Employer Rate: The amount the employer contributes to National Insurance based on the employee’s earnings.

Tax Computation Use Cases

G2n seamlessly compliantly calculates taxes of employees for a wide range of scenarios that includes combination of the below:

• Tax Codes: Handles both cumulative and non-cumulative tax codes accurately (Learn More).
• National Insurance Contributions: Supports various rates and category letters for compliance.
• Personal Loan Types: Processes diverse loan deductions directly through payroll.
• Payroll Cycles: Adapts to different pay frequencies, ensuring timely calculations.
• Pension Types: Supports full salary pensions, qualified earnings, voluntary pensions, and more.

What the Letters Mean

The letter in a tax code indicates the employee’s specific tax situation. Common letters include:

• L: The standard tax code, used for employees with the regular personal allowance.
• M and N: Used for employees transferring part of their allowance to a partner.
• T: For employees with more complex tax situations.
• K: Indicates additional tax is owed from previous years or due to taxable benefits.
• S and BR: Used for employees working in Scotland or with special tax scenarios.

Category Letters

National Insurance (NI) category letters determine how much both the employee and employer need to contribute to National Insurance. Employers use these letters to identify the employee’s group and calculate their contributions accordingly. Below is a breakdown of the key category letters for different employee groups.

Standard Category Letters

• Category A: Applies to all employees, except those in specific groups such as B, C, H, J, M, V, and Z.
• Category B: For married women and widows who are entitled to pay reduced National Insurance.
• Category C: For employees who are over the State Pension age.
• Category H: Applies to apprentices under 25 years old.
• Category J: For employees who can defer National Insurance because they are already paying it through another job.
• Category M: For employees under 21 years old.
• Category V: For employees working in their first job after leaving the armed forces (veterans).
• Category Z: Employees under 21 who can defer National Insurance because they are already paying it in another job.

Category Letters for Freeports Employees

Employees working in Freeports use specific category letters to determine their National Insurance contributions:

• Category F: For all employees working in Freeports, except those in categories I, L, and S.
• Category I: For married women and widows working in Freeports who are entitled to pay reduced National Insurance.
• Category L: For employees working in Freeports who can defer National Insurance because they are already paying it in another job.
• Category S: For employees over the State Pension age working in Freeports.

Category Letters for Investment Zones Employees

Employees working in investment zones have their own set of category letters:

• Category N: For all employees working in investment zones, except those in categories E, D, and K.
• Category E: For married women and widows working in investment zones who are entitled to pay reduced National Insurance.
• Category D: For employees working in investment zones who can defer National Insurance because they are already paying it in another job.
• Category K: For employees over the State Pension age working in investment zones.

Category Letter X

• Category X: Used for employees who do not have to pay National Insurance, such as those under 16 years of age.

National Insurance Contributions Rates

National Insurance (NI) contributions are determined by a person’s employment status, earnings, or profits. The rates and thresholds are revised annually, typically announced during the UK Chancellor’s Budget or Autumn Statement. Below is a detailed breakdown of the different NI classes and their respective contribution rates for the tax year 2024–2025.

Class 1 National Insurance (Employees and Employers)

Thresholds and Rates

• Employee Contributions: Based on weekly or monthly earnings, employees begin contributing after crossing the Primary Threshold (PT) and pay a reduced rate above the Upper Earnings Limit (UEL).
• Employer Contributions: Employers contribute from the Secondary Threshold (ST) onward. Special thresholds apply to certain groups (e.g., under 21s, apprentices, veterans, employees in Freeports or investment zones).

Weekly and Monthly Thresholds (2024–2025):

• Lower Earnings Limit (LEL): Employees do not pay NI but receive contribution-based benefits.
  • Weekly: £123, Monthly: £533
• Primary Threshold (PT): Employees start paying NI.
  • Weekly: £242, Monthly: £1,048
• Secondary Threshold (ST): Employers start paying NI.
  • Weekly: £175, Monthly: £758
• Upper Earnings Limit (UEL): Lower employee NI rates apply above this level.
  • Weekly: £967, Monthly: £4,189

Special Zero-Rate Thresholds (e.g., under 21s, apprentices under 25, Freeport workers):

• Weekly: £481 or £967 (depending on category).
• Monthly: £2,083 or £4,189.

Class 2 and Class 4 National Insurance (Self-Employed)

• Class 2 Contributions: Fixed weekly rate for self-employed individuals earning above the Small Profits Threshold.
• Class 4 Contributions: Based on annual profits.
  • Lower Profits Limit: Contributions begin at £12,570.
  • Upper Profits Limit: Lower rates apply above £50,270.
• Rates:
  • Between £12,570 and £50,270: 6%
  • Above £50,270: 2%

Special Rates

• Share Fishermen: £4.10 per week.
• Volunteer Development Workers: £6.15 per week.

Class 3 National Insurance (Voluntary Contributions)

Individuals can pay voluntary NI to fill gaps in their contribution record and maintain eligibility for state benefits.

• Rate: £17.45 per week for 2024–2025.
• Payments can be made via direct debit, with monthly payments depending on the number of weeks in the month.

Class 1 Rates Summary (Employers and Employees)

Employee Contribution Rates (2024–2025)

• Between PT and UEL: 8%
• Above UEL: 2%
• Married Women’s Reduced Rate: 1.85%

Employer Contribution Rates (2024–2025)

• Above ST: 13.8%
• Below UST, FUST, IZUST: 0% (zero-rate for specific groups).

Personal Income Tax

In the UK, personal income tax is levied on earnings that exceed specified tax-free allowances. The amount of tax you pay is determined by your annual income, available allowances, and tax bands specific to the United Kingdom.

Personal Allowance

The Personal Allowance is the portion of income exempt from tax in the UK. For the 2024–2025 tax year:

• The standard allowance is £12,570, meaning you don’t pay income tax on earnings up to this threshold.
• The allowance is gradually reduced for those earning above £100,000 and eliminated entirely for incomes exceeding £125,140.

Certain individuals, such as those claiming Blind Person’s Allowance, may be eligible for an increased allowance in the UK.

Income Tax Rates and Bands in the UK

Taxable income is calculated after deducting the Personal Allowance. The rates and bands for England, Wales, and Northern Ireland in 2024–2025 are as follows:

Note: Scotland operates a separate tax system with different rates and bands under its devolved powers.

Tax-Free Income and Allowances in the UK

Some types of income in the United Kingdom are exempt from tax due to additional allowances:

• Savings Interest: The Personal Savings Allowance exempts interest earned on savings up to a specific limit.
• Dividends: Income from company shares is tax-free up to a certain threshold.
• Trading and Property Allowances:
  • The first £1,000 of self-employment income is tax-free under the “trading allowance.”
  • The first £1,000 of rental income is tax-free unless opting for the Rent a Room Scheme.

Income exceeding these limits is taxed according to the standard UK rates.

Tax Reliefs and Reductions in the UK

UK taxpayers can reduce their tax liabilities through specific reliefs:

• Marriage Allowance: If your income is below the Personal Allowance, you can transfer up to 10% of your unused allowance to your spouse or civil partner.
• Married Couple’s Allowance: Couples where one partner was born before 6 April 1935 may qualify for additional relief (if not claiming the Marriage Allowance).

Employee Loans

In the UK, when employers provide loans to employees or their family members, specific rules apply concerning reporting and National Insurance contributions. These rules vary depending on the type of loan, its terms, and whether it qualifies for exemptions.

Types of Employee Loans

Beneficial Loans

1. Beneficial loans are those offered at interest-free terms or at a rate below HMRC’s official interest rate. These include loans that are:
   • Directly issued by the employer.
   • Facilitated, guaranteed, or transferred by the employer or another entity linked to the employer.
   • Provided by an individual with a material interest in the employer’s business.
2. Examples:
   • Interest-free loans for employees.
   • Loans for relocation or personal expenses.

Loans Written Off

If an employer decides to write off an employee’s loan, the value of the written-off amount must always be reported, irrespective of whether the loan was beneficial.

Director’s Loan Accounts

Employers or companies often use loan accounts to pay a director’s personal bills or expenses. These transactions are treated as loans and fall under the same rules as other beneficial loans.

Exemptions for Employee Loans

Certain loans may be exempt from reporting or National Insurance requirements, such as:

• Small Loans: Loans under £10,000 in a tax year are generally exempt from reporting and National Insurance.
• Loans for specific purposes, such as qualifying relocation expenses, may also be excluded.

However, loans exceeding the exemption threshold must be fully reported and may attract National Insurance contributions.

Employer Responsibilities for Reporting and Payments

For Beneficial Loans

• Reporting: The loan must be reported to HMRC using Form P11D.
• National Insurance: Employers are required to pay Class 1A National Insurance contributions on the loan’s benefit value.

For Loans Written Off

• Reporting: The written-off amount must also be reported using Form P11D.
• National Insurance: Employers must deduct and pay Class 1 National Insurance contributions on the value of the loan written off.

For Director’s Loans

• These are reported similarly to beneficial loans, with the same requirements for Class 1A National Insurance contributions.

Working Out the Loan’s Value

To determine the taxable value of a beneficial loan:

• Compare the interest rate charged to the HMRC official interest rate.
• The difference between the two rates is treated as a benefit in kind and is subject to National Insurance contributions.

Pensions

Pensions in the UK are designed to provide financial security during retirement, acting as a vital supplement to the State Pension. There are several types of pension schemes available, broadly categorized into private pensions and workplace-based schemes. These can be tailored to individual needs, offering a structured way to save for later years.

Types of Pensions in the UK

Defined Contribution Pensions

Defined contribution pensions, also called “money purchase” schemes, focus on the value of contributions made by an individual and/or their employer. The total amount saved depends largely on investment performance.

Key Aspects:

• Structure: These can be personal pensions arranged independently by individuals or workplace pensions set up by employers.
• Investment-Based Growth: Contributions are invested in various assets like stocks and bonds. The value of the pension pot fluctuates based on market performance.
• Risk Adjustment: Some plans automatically move funds into safer investments as retirement nears, though this option can often be requested if not provided.

What You’ll Receive

• The size of your pension depends on:
  • Contributions: How much you and your employer have paid in.
  • Investment Growth: Performance of the pension provider’s investments.
  • Withdrawal Preferences: Whether funds are taken as a lump sum, regular income, or smaller withdrawals over time.
• Tax-Free Withdrawal: You can access up to 25% of your pension pot tax-free, capped at £268,275, though this limit may be higher if you hold a protected allowance.
• Management Costs: Pension providers typically charge a small management fee, reducing the final pot slightly. Always confirm these charges with your provider.

Defined Benefit Pensions

Defined benefit pensions are employer-arranged schemes that provide a guaranteed income during retirement. These are often referred to as “final salary” or “career average” schemes, as payouts depend on your earnings and length of service.

Key Aspects

• Structure: These pensions are not tied to investment performance or individual contributions but are based on the pension scheme’s rules.
• Guaranteed Income: Your retirement income is determined by:
  • Salary: Typically based on either your final salary or an average of your career earnings.
  • Years of Employment: The longer you work for the employer sponsoring the scheme, the larger your pension will be.

What You’ll Receive

• A fixed annual amount is promised by the pension provider, giving a dependable source of retirement income.
• Similar to defined contribution pensions, you can withdraw 25% of the total value tax-free, up to £268,275, with possible increases if you have a protected allowance.

Request a Demo

Explore how G2N can streamline your business operations and maximize efficiency. Request a free demo tailored to your needs and discover how our innovative solutions can support your organization’s growth. Whether you’re looking to optimize workflows, enhance employee productivity, or achieve cost savings, G2N is designed to deliver measurable results. Contact our team today to schedule your personalized demo in the UK!

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