Tax on Bonus

Samt1

Hi, I have a question about the tax I pay on my bonus.
My company operates a profit share scheme where 25% of the profits are shared between the employee's, great.
So I get an amount £XXXX but then have to pay up to 44% tax on it.
I'm only on the 20% tax bracket normally so why do I get taxed so much on my bonus? Can I claim it back?

Regards
Sam

somethingcorporate

Does the bonus take you into the 40% bracket? Otherwise it will work itself out by the end of the financial without you having to do anything.

Keep an eye on the tax paid, you will find over the next few months you will pay less if you have overpaid in one month due to bonus.

CLAPTON

how much is your normal monthly pay
how much is the bonus
when is the bonus paid?

you may find that in the month the bonus is paid, the tax is very high as the payroll system may tax you at 40%, however this will automatically correct itself in subsequent months if your total pay for the year doesn't take you into the 40% tax bracket

Samt1

Hi Guys, we get the bonus twice a year. Take last year for example, 1st payment was £1000, my wages take home are £1300 and I ended up with about £550 extra that month so nearly got taxed half of it, now I have seen my take home rise sligtly but no where near enout to balance out what I lost on my bonus. Does that make sense?

CLAPTON

your gross salary before bonuses is about 19,500?

what is you tax code?

harryhound

The tax year runs from 6th of April until the 5th of April.
If you get a bonus with your April pay, the tax system is likely to "think" you will be a higher rate tax payer and a serious contributor to that weekly tax called National Insurance.

As income tax is an annual tax, the system will realise it has made an incorrect assumption and pay back the over deduction in later months with the aim of being "all square" by the 5th of April.
[You won't get the National Insurance back though.]

chrisbur

Proper figures are required to look at this accurately but on the details you have given you do not look like a 40% tax payer, unless you have a low tax code for some reason. It is possible that if you had a bonus very early in the tax year you may have paid some 40% tax then but that will have been repaid to you by now.

Are you sure that when you refer to tax you mean tax or are you including anything else, for example national insurance and/or student loan repayments?

If you want your figures checked properly then you need to advise tax code and then gross tax NI and any other deductions for each month of the tax year.