Deductions on Overtime Pay

Lost_Prophet

Hi All,

In the past I have been doing lots of overtime, ranging from 10 hours to 46 hours a month depending on the bank holidays. Its double time on the days I do overtime so its all good.

The problem though is my deductions bracket. I get 20% deducted on my normal pay but if I do just one hour of overtime, I get 40% taken straight away off any overtime pay. This includes Tax, National Insurance and Student Loan. Anyone know if this right or is the taxman fleecing me yet again?

Cheers

jem16

Without figures no-one will be able to tell you. Perhaps your oevertime takes you into the higher rate tax bracket.

chrisbur

Lost_Prophet wrote: »

Hi All,

In the past I have been doing lots of overtime, ranging from 10 hours to 46 hours a month depending on the bank holidays. Its double time on the days I do overtime so its all good.

The problem though is my deductions bracket. I get 20% deducted on my normal pay but if I do just one hour of overtime, I get 40% taken straight away off any overtime pay. This includes Tax, National Insurance and Student Loan. Anyone know if this right or is the taxman fleecing me yet again?

Cheers

You get an allowance before any of these deductions are made, they can vary in some cases but generally each month tax is not deducted from the first £540 NI is not deducted from the first £476 and student loan is not deducted from the first £1250. Tax is then deducted at 20% NI usually at 11% and student loan at 9%; so once your monthly earnings are over £1250 the sum of tax NI and student loan will be 40%. What is happening is that some of your wages are having nothing deducted some 11% (NI) some 31% (NI + tax) and some 40% (NI+tax+student loan) which is averaging 20% and when you get overtime that is just continuing in the 40% band (NI+tax+student loan) it is nothing to do with it being overtime.