What is base salary? Is it paid before or after-tax? How is it calculated?
Let’s find out below. 👇
What does base salary mean?
Your base salary is the initial amount of money you’ll receive as an employee. It does not include bonus payments, benefits, or pay rises. It’s simply the base rate of compensation your position pays during a specified period, and it can be expressed as an annual salary, or as being paid hourly, weekly or monthly.
Is base salary before or after tax?
Your base salary is the amount you’re paid before tax is deducted. It’s your income before incentives — such as bonuses, benefits or commissions — are added to your pay, and before deductions, such as tax and National Insurance, are taken out.
How is base salary calculated?
There are a number of factors to consider when a base salary is calculated. Rates vary significantly between professions, and within those professions, as an individual’s experience and qualifications can dictate the level of base pay they’re offered. And, of course, geography also plays its part; a web designer working in London is likely to command a higher base salary than one working in, say, Leeds, to account for a higher cost of living.
Salaried employees are usually expected to work a minimum number of hours a week in exchange for their base salary, which is typically paid monthly. Hourly employees, on the other hand, are paid for the exact number of hours they work, and they’re usually paid at the end of every week.
Base vs gross vs net: what’s the difference?
If your base salary is the initial amount your position pays before any bonuses or benefits, and before taxes are deducted, then gross pay is the total amount you’ll earn (base salary + extras) before tax.
Your net pay is the amount left over after taxes, National Insurance and other deductions such as Student Loan repayments and pension contributions have been taken off. Net pay is often referred to as take-home pay.
What can be paid on top of a base salary?
- Overtime: Employers are legally obliged to pay at least the National Minimum Wage for the total number of hours worked. This includes overtime. If you’re contracted to work 30 hours per week, and you work an extra 12 one week, your gross pay for that week should be 42 x your hourly wage. Overtime is more commonly paid to hourly workers than salaried employees.
- Bonuses: This is a cash reward, often paid in acknowledgement of a certain goal or target being met. Bonuses are typically paid around Christmas time, or at the end of the financial year. Bonuses are more commonly paid to salaried employees, however, some retail businesses pay small bonuses to hourly employees as recognition of their hard work.
- Sales Commissions: Depending on the industry, companies reward employees based on their individual performance. If a specific sale can be credited to an employee, they may receive a commission — usually a percentage of the sale.
- Tips: If bars, restaurants or cafes pool their tips, these are split evenly between employees and added to their base pay.
- Expenses: If in the process of doing your job, you need to spend money (e.g. on transport to a meeting or a business lunch), your employer may offer to reimburse you. This is usually in exchange for a valid receipt or proof of purchase. Expenses are then added to your wage slip.
Get your salary paid into our Revolut Account
Now that you understand your base salary, you can set about getting it paid into your Revolut account. Simply navigate to your Profile > Account details, and provide them to your employer.
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