bonus payment - tax?

Robert_Sterling

Make that 41% as you also pay 1% additional NI.

Chrismaths

And 50% if you have a student loan still (9% student loan payment)

Andy_L

Sand_Man wrote:

bonus always get taxed at 40% i think. therefore, what ever it says on you letter from your employer, take off at least 40% straight away for a general guide to what you may see in real terms

Bonus are taxed at whatever the appropriate rate of income tax for your annual income ie 0-40%

jem16

Andy_L wrote:

Bonus are taxed at whatever the appropriate rate of income tax for your annual income ie 0-40%

Although often it's taxed initially at 40% because the bonus will be paid all in one month and would probably take you over the higher rate threshold for that month. You may be due a rebate later depending on your circumstances.

Sand_Man_2

jem16 wrote:

Although often it's taxed initially at 40% because the bonus will be paid all in one month and would probably take you over the higher rate threshold for that month. You may be due a rebate later depending on your circumstances.

is this rebate automatically paid back to you or do you have to claim it make yourself

cheers

jem16

Sand_Man wrote:

is this rebate automatically paid back to you or do you have to claim it make yourself

cheers

I think it very much depends on when in the tax year the bonus was paid. It may be quicker to claim it yourself at the end of the financial year as far as I know.

oldwiring

Unless you are raxed on week 1/ month 1 basis Income Tax deducted via PAYe is worked on a cumularive basis. In effect in month 1 one twelfth of your annual allowance, adjustment for the 20% tranche. and annual tranch due to be taxed at the 22% rate is applied to earnings to date. The earnings are then taxed appropriately. Next month, the same calculations are made but two-twelfths of all above are applied to earnings so far. The tax calculated less rge total of tax deducted in month 1 is then deducted form the month's gross pay. If the tax amont is negative there will be a refund of tax instead of a deduction. So it goes on to end of year, when hopefully all will be square

Mikeyorks

village_life wrote:

ive just received my annual bonus letter, and it looks quite a healthy figure :beer:

You make it sound as if this isn't the first such letter - so has it reflected gross or net in the past? From the additional info you quote - it certainly sounds to be the gross figure.

Bear in mind the way it is taxed may depend on the period it applies to. For instance if it applies to y/e 31st March - it will be added back to last years salary and taxed accordingly.

But the norm is that it will apply to the current year - and be taxed on your current code number - in which case :

is this rebate automatically paid back to you or do you have to claim it make yourself

...it will be refunded automatically. But will probably not be a 'rebate' as such .. but a reduction in the amount of tax you pay the following month.

Oldwiring.....adjustment for the 20% tranche

Think you intended that to be 10%??

oldwiring

Mikeyorks wrote:

You make it sound as if this isn't the first such letter - so has it reflected gross or net in the past? From the additional info you quote - it certainly sounds to be the gross figure.

Bear in mind the way it is taxed may depend on the period it applies to. For instance if it applies to y/e 31st March - it will be added back to last years salary and taxed accordingly.

But the norm is that it will apply to the current year - and be taxed on your current code number - in which case :



...it will be refunded automatically. But will probably not be a 'rebate' as such .. but a reduction in the amount of tax you pay the following month.



Think you intended that to be 10%??

Oops, yes 10%

K9cuddles

oldwiring wrote:

Unless you are raxed on week 1/ month 1 basis Income Tax deducted via PAYe is worked on a cumularive basis. In effect in month 1 one twelfth of your annual allowance, adjustment for the 20% tranche. and annual tranch due to be taxed at the 22% rate is applied to earnings to date. The earnings are then taxed appropriately. Next month, the same calculations are made but two-twelfths of all above are applied to earnings so far. The tax calculated less rge total of tax deducted in month 1 is then deducted form the month's gross pay. If the tax amont is negative there will be a refund of tax instead of a deduction. So it goes on to end of year, when hopefully all will be square

I can't believe you managed to answer my question that my Payroll couldn't answer!! (I guessed they just plugged the figures in to a programme and ever actually knew!!)