Bonus Tax Calculation

davidcollins01

Firstly apologies if this is in the wrong section, or even the wrong forum lol

I'm trying to work out how much tax i pay on a bonus i have coming in my next pay packet. i need to work it out in order to budget for xmas.

The bonus is £1500 and i am still on a 22% tax bracket.

can anyone possibly help?

regards

DC

Sally14

22% tax and 11% NIC – leaving you with £1,005

CLAPTON

also depends upon whether the bonus is pensionable

WestonDave

Post 2 is mathematically correct but there are a couple of cautions.

Firstly the potential good news - NI drops to 1% on any amount in excess of £2795 - so if your normal monthly pay is more than £1300 (£15,600 pa so very likely) you will pay 11% on the amount of the bonus which brings you up to £2795 that month, and then 1% on the excess.

Then the potential bad news - although this is less likely but worth the warning. Tax unlike NI is calculated on a cumulative annual basis (NI is on that week/month regardless of the rest of the year - except for company directors cos they could abuse it!). Depending on how close you are to hitting 40% tax - kicks in at £37435pa (unless you have a non standard tax code) its possible that a big bonus in one month could push you temporarily into 40% - that will unwind again over coming months but since you are trying to budget its worth being careful. If your salary is less than £35k a year you will not be hit by this so nothing to worry about leaving you 22% tax to pay. (NB the £35k takes account of the £1500 bonus compared to 9 months allowances hence the difference from the £37k figure)

davidcollins01

Thanks for that WestonDave. I'm currently on £15200 p/a so i reckon this wont push me into the 40% bracket. I've been told its 1/3 off basically and just wanted to confirm

thanks all