do we get taxed the more overtime we do?

Evilm

Play around with your hours on this: http://www.thesalarycalculator.co.uk/hourly.php

(you may have to put all your hours in as hourly or use the "take home" tab and calculate what the overtime makes your yearly income to get a correct idea though.)

For an example someone in another thread has had a bonus of a months salary and has had £400 Tax and NI taken on that compared to £205 on their normal salary because all of that money is over their personal allowance for the month so every £1 gets taxed. Thread here: https://forums.moneysavingexpert.com/discussion/3324852

lovinituk

Evilm wrote: »

For an example someone in another thread has had a bonus of a months salary and has had £400 Tax and NI taken on that compared to £205 on their normal salary because all of that money is over their personal allowance for the month so every £1 gets taxed. Thread here: https://forums.moneysavingexpert.com/discussion/3324852

Doesn't that get rebated at some point in the future though as long as the yearly income doesn't cross the next threshold? Granted, it means you don't get the extra money for a while but it's not lost forever.

Evilm

lovinituk wrote: »

Doesn't that get rebated at some point in the future though as long as the yearly income doesn't cross the next threshold? Granted, it means you don't get the extra money for a while but it's not lost forever.

No. Not unless your accounts department do it wrong and show you as planning to receive the same extra wage all year round. If they pay overtime it should be worked out on just those extra hours on a one off basis and you will not get that tax back.

I have had one employer put an overtime in as "usual wages" and therefore got taxed too much. If they do that it will adjust back again the following month (hopefully). If it doesn't you can apply for it back when you get your P60 and that shows you paid a higher amount of tax than you should of for your earnings.

lovinituk

Evilm wrote: »

No. Not unless your accounts department do it wrong and show you as planning to receive the same extra wage all year round. If they pay overtime it should be worked out on just those extra hours on a one off basis and you will not get that tax back.

I have had one employer put an overtime in as "usual wages" and therefore got taxed too much. If they do that it will adjust back again the following month (hopefully). If it doesn't you can apply for it back when you get your P60 and that shows you paid a higher amount of tax than you should of for your earnings.

I used to get 'automatic' rebates for overpaid tax - the only reason I raised it as a question is because I have completed tax returns for years and don't know if these rebates still happen without you having to ask.

One thing for sure is if you were charged extra for overtime and then voluntarily completed a tax return, you would definitely get a rebate of any overpaid tax.

Tax is based on actual income and the thresholds mentioned by others above. You shouldn't have to pay a one off of 40% on some overtime and not get it back if your overall annual income was below the higher rate tax bracket.

GGLLOYD

somethingcorporate wrote: »

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

Although I understand the point you're trying to make, that's actually incorrect. Yes, you will receive your personal allowance of £7475 per annum, but that is accounted for as follows;

Per Annum
£0.00 to £7,475.00 = 0% Tax
£7,476 to £35,000 = 20% Tax
£35,001 to £150,000 = 40% Tax
£150,001+ = 50% Tax

You WILL start paying 40% tax on anything over £35,000 per annum NOT £35,000 + £7475 = £42,475

http://www.hmrc.gov.uk/rates/it.htm

KiKi

GGLLOYD wrote: »

Although I understand the point you're trying to make, that's actually incorrect. Yes, you will receive your personal allowance of £7475 per annum, but that is accounted for as follows;

Per Annum
£0.00 to £7,475.00 = 0% Tax
£7,476 to £35,000 = 20% Tax
£35,001 to £150,000 = 40% Tax
£150,001+ = 50% Tax

You WILL start paying 40% tax on anything over £35,000 per annum NOT £35,000 + £7475 = £42,475

http://www.hmrc.gov.uk/rates/it.htm

No, somethingcorporate is correct and your information is wrong.

The £35,000 for 20% is after your personal allowance has been taken into account. If you earn £40k, then once you take off your personal allowance of £7475, your earnings are £32,525 which puts you in the 20% bracket.

The 20%, 40% and 50% income tax rates quoted in your link are not salary brackets, they are rates which are only applied to taxable income: ie, after the personal allowance has been taken off. Hope that explains better.

KiKi

StephenM_2

GGLLOYD wrote: »

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

When the new rules on Child Benefit comes in (no CB for higher rate taxpayers), some people will have to watch their overtime closely. Not the OP, though - they are well under the HR threshold.

SarEl

GGLLOYD wrote: »

Although I understand the point you're trying to make, that's actually incorrect. Yes, you will receive your personal allowance of £7475 per annum, but that is accounted for as follows;

Per Annum
£0.00 to £7,475.00 = 0% Tax
£7,476 to £35,000 = 20% Tax
£35,001 to £150,000 = 40% Tax
£150,001+ = 50% Tax

You WILL start paying 40% tax on anything over £35,000 per annum NOT £35,000 + £7475 = £42,475

http://www.hmrc.gov.uk/rates/it.htm

Really? I'm a barrister who is crap at figures and even I know this is incorrect.

From another thread in the last couple of days in which you encoraged someone to PM you...

GGLLOYD wrote: »

I'm a Payroll Administrator and have fairly extensive knowledge with HR/Emploment Law legislation as well as Payroll.

If you don't even know the way tax is calculated, exactly what kind of payroll administrator are you - and is your knowledge of HR / employment law better or worse than your knowledge of payroll?

jem16

GGLLOYD wrote: »

Although I understand the point you're trying to make, that's actually incorrect. Yes, you will receive your personal allowance of £7475 per annum, but that is accounted for as follows;

Per Annum
£0.00 to £7,475.00 = 0% Tax
£7,476 to £35,000 = 20% Tax
£35,001 to £150,000 = 40% Tax
£150,001+ = 50% Tax

The correct info is;

First £7475 = 0% tax
Next £35,000 = 20% tax
£35,001 to £150,000 = 40% tax
£150,001 = 50% tax

It starts to get complicated at over £100k as you start to lose your tax free personal allowance - by £115k all of your income is taxable.

You WILL start paying 40% tax on anything over £35,000 per annum NOT £35,000 + £7475 = £42,475

Go to this site and put in £42,475 as the yearly wage. The click the little arrow beside Tax Due.

http://listentotaxman.com/index.php

Do tell us how much 40% tax is due please.

http://www.hmrc.gov.uk/rates/it.htm

If you actually read the link you have given you will see that the figures are taxable bands and not total income.

Savvy_Sue

The other thing which makes people think they're being overtaxed on overtime is if they have a student loan. Some of my colleagues don't think it's worth doing overtime because an extra chunk goes to s/l rather than to them ...