How to calculate your weekly earnings, gross annual salary or annual taxable profit for the Childcare Offer for Wales.
Average weekly earnings
To calculate your average weekly earnings, divide all the earnings in a relevant period by the number of weeks, for example, over the past 12 weeks you earned a total of £3500. Divide that by 12 which gives an average of £291.67 a week.
Gross annual salary
Your gross annual salary is your total earned income in a year before any deductions, such as tax, national insurance, health and pension contributions. It includes your regular wages or salary, overtime, bonuses, tips, and any commissions.
If you are paid monthly, and do not expect to get an annual bonus, multiply your monthly gross income by 12 to determine the gross annual salary.
Some employees get annual bonuses, normally towards the end of the tax year. For example sales staff may get a bonus for exceeding sales targets, or all staff may get a bonus if the business exceeds targets. These often occur year after year and are a normal part of the employee’s annual income. If you reasonably expect a bonus, even if you have no contractual right to one, it needs to be taken into account.
If you are paid per hour, multiplying the hourly rate you are paid by the number of hours worked per week, times 52, will produce your gross annual salary.
If you are self-employed, your gross income is calculated based on the gross profit of the business less certain allowable direct expenses. The following HMRC guidance provides further information on what can be considered allowable expenses for this purpose (on GOV.UK).
Exclusions from gross income
Any capital sales of assets held, whether held as investments such as shares or properties or otherwise, for instance a family home, even if at a profit. Capital gains are not classed as income even if they are subject to Capital Gains Tax.
Annual taxable profit
If you are self-employed or run your own business, you will need to provide the annual taxable profit of the business. This is the total income of your business, minus allowable expenses. HMRC guidance provides further information on what can be considered allowable expenses (on GOV.UK).
If you are a Director of a company you will need to provide evidence of your Self-Assessment tax return and/or provide all evidence of income and additional income.