Overtaxed on overtime- does it even out?

f1982

My total earnings in a year keep me well below the 40% tax bracket. However about 2-3 times a year I get a bumper amount of overtime paid with my salary in a single month which pretty much doubles my pay for that month. When this happens I get taxed at the 40% rate and its a killer!
My question is- since my total earnings for the year are below the higher tax bracket threshold:
- does the tax payable for the months following a bumper pay-slip get reduced?
-does the tax payable on your final pay-slip in a financial year make sure you have paid only 20% on all taxable pay?

I can't seem to find an answer to these questions either using google or -believe it or not- our accounts department!

mjm3346

Short answer-Yes

mjm3346

If you are on a standard cumulative tax code then at the end of the tax year you should have paid the correct total tax for your total income that year (apart from the now fairly common "computer" errors).

CLAPTON

what's your taxcode?
what are your total earnings after pension payments have been deducted

f1982

CLAPTON wrote: »

what's your taxcode?
what are your total earnings after pension payments have been deducted

Tax code is 747L
I am currently looking at but do not have a pension. Total earnings for a year are less than £35000.

I was just worried I was getting hit with a massive tax bill on my overtime payments at 40% which was then lost.

CLAPTON

f1982 wrote: »

Tax code is 747L
I am currently looking at but do not have a pension. Total earnings for a year are less than £35000.

I was just worried I was getting hit with a massive tax bill on my overtime payments at 40% which was then lost.

747L is the 'normal' taxcode
with an income of only 35,000 you are well below the 40% band (which starts at 42,575 per annum)

any 'overpayment of tax in a month when you have a large salary will be repaid in later months and will be exactly correct by year end

you should be able to see this in your payslips