PAYE Income Tax and NI on Bonuses

foxprorawks

Hi,

I'm interested in how annual bonuses are taxed.

Say your income is £32,000 pa.

If you get a bonus of £1,000 at the end of April (i.e. the first monthly payment in the new tax year), how is income tax and national insurance calculated?

Do the inland revenue recognise this as a one-off extra payment, or do they assume that you are now earning £44,000 pa and that charge you income tax at the higher rate for that month?

What happens in May, when your monthly wage goes back to normal?

Is there any impact on national insurance contributions?

Needless to say, this isn't a hypothetical question.

Thanks.

fengirl_2

The tax tables assume you will now be on £44k and so you would get charged a little at 40% (only £12.50). This will be refunded probaby the following month when your pay goes down to basic. NI is calculated on a month by month basis, so there would be no refund due.

foxprorawks

fengirl wrote: »

The tax tables assume you will now be on £44k and so you would get charged a little at 40% (only £12.50). This will be refunded probaby the following month when your pay goes down to basic. NI is calculated on a month by month basis, so there would be no refund due.

Thanks for the speedy reply.

So, of course, the bottom line is: how much of the £1,000 would be left after deductions? Approx. £700?

CLAPTON

approximately you pay 20% tax and 11% NI (a little more as fengirl has said) assuming you pay no pension contributions