do we get taxed the more overtime we do?

bob_dob

Hi,
Im forever being warned at work that the more overtime we do the more we are being taxed. I was under the impression that we are taxed 20% of everything, be it our standard hourly pay or our overtime rate (time and a third) but they are quite insistent.
Please can someone clear this up?

ILW

Some people are stupid. Unless your OT takes you into a higher tax bracket, you will be taxed at standard rate.

lovinituk

And even if the o/t does take you into the higher tax bracket, it is only the part of the earnings over the higher threshold that is taxed at the higher rate. A lot of people think that once you hit the higher tax bracket, that all your wages are taxed at the higher rate, which is not the case.

bob_dob

Thank you. I've been saying that for ages.
I don't know if it's common amongst workforces but amongst factories/engineering places it is still used as an argument- 'Dont do too much overtime or they'll tax you loads on it'.....and it has always bugged me!
The higher tax bracket doesn't really apply as we earn between £19,000 and £20,000.

Please can i also check that it is 20% tax and 11% NI?

zfrl

bob_dob wrote: »

Hi,
I was under the impression that we are taxed 20% of everything

Don't forget your tax free allowance. This is what most people are thinking about. It just feels that the more you work the less you get as in most cases you are taxed on all of your overtime.

Judith_W

20% tax 12% NI since April.

scheming_gypsy

I think it comes from people looking at their pay slip and not seeing as much as they hoped. When you're trying to work out how much extra you'll be taking home you calculate how many hours overtime you've done and then multiply it by your overtime rate... So when the reality hits home of how much you're getting after you've been taxed; it gives the impression that you're paying a lot more tax

GGLLOYD

bob_dob wrote: »

Hi,
Im forever being warned at work that the more overtime we do the more we are being taxed. I was under the impression that we are taxed 20% of everything, be it our standard hourly pay or our overtime rate (time and a third) but they are quite insistent.
Please can someone clear this up?

bob_dob wrote: »

Thank you. I've been saying that for ages.
I don't know if it's common amongst workforces but amongst factories/engineering places it is still used as an argument- 'Dont do too much overtime or they'll tax you loads on it'.....and it has always bugged me!
The higher tax bracket doesn't really apply as we earn between £19,000 and £20,000.

Please can i also check that it is 20% tax and 11% NI?

20% Tax on earnings up to £35,000 per annum.
40% Tax from £35,000 to £150,000
50% Tax on £150,000 excess

Employee NIC is 12%.

But of course, it's only logical that the more you earn the more you will be taxed since it's calculated on a percentage basis.

But basically saying "Don't earn more because you'll get taxed too much!!" is nonsense.

somethingcorporate

GGLLOYD wrote: »

20% Tax on earnings up to £35,000 per annum.
40% Tax from £35,000 to £150,000
50% Tax on £150,000 excess

Don't forget the tax-free allowance of £7,700 ish so HRT only starts at about £43k a year.

harz99

bob_dob wrote: »

Hi,
Im forever being warned at work that the more overtime we do the more we are being taxed.

As a statement for most people that is entirely correct.

Providing your normal work pay takes you over the PAYE threshold, then yes every extra hour you are paid generates more income tax and NI to pay from that extra hour.

In industries that are or were heavily unionised the "warning" about more work/more tax was often used as a device to prevent overtime working resulting in lost or fewer jobs.

t0rt0ise

NI goes down to 2% after about £42,000 as well.