Bonus by cheque

Danielle_W

At my work we are handed a Christmas bonus on our last working day before Christmas by cheque. We have to go cash it. Then in January it is added onto our payslip and tax and ni taken off. Is this correct? It means that our pay in January is less than normal as we're paying tax and NI on the gift we were given in December. It ends up that we don't spend it as we're conscious that our January pays will be 'short' due to having to pay the tax and NI on our bonus. Can someone please advise. With thanks

Jarndyce

That is an odd way of doing it but it sounds like it comes right in the end. You are being given a cheque for the gross amount, and paying the tax etc in your next payroll run. The alternative would be to give you the bonus and make the deductions at the same time as part of the payroll run in either December or January.

Don't think you'll get much sympathy for the 'January pay is short' argument! You just have to make sure you only spend the net amount from your bonus - otherwise it sounds like a way of bringing forward some of January's pay to December which many people would be pleased to be able to do.

saintjammyswine

To echo Jarndyce, having a little extra over Dec/Jan then slightly less at the end of Jan sounds great to me!

Danielle_W

Ok thanks for the replies. Yes it is nice to have a little extra, its just the remembering to not spend it all when you have kids who don't understand money doesn't grow on trees and the sales etc to tempt you.

And then the January bills arrive!!

Merry Christmas

bendix

Danielle_W wrote: »

Ok thanks for the replies. Yes it is nice to have a little extra, its just the remembering to not spend it all when you have kids who don't understand money doesn't grow on trees and the sales etc to tempt you.

And then the January bills arrive!!

Merry Christmas

Yes, that's where being an adult and being responsible comes into play.

skintandscared_2

You will only have the respective additional tax and NI taken off the bonus. Unless the bonus takes you into the next tax bracket it won't make the slightest difference. Frankly, I'd just be grateful you've GOT a bonus.

zagfles

As an approximation, if you earn under £40,000, assume that a third of it will go in tax & NI and save that for your next payday. The other 2/3rds is yours to spend.

It's an odd way of doing it - most companies will estimate the tax & NI and deduct that from the extra payment, so it all balances out. For instance if the bonus was £300 they'd pay you £200, then add £300 to your next pay packet, deduct about £100 tax and the £200 "loan" so it approximately balances.

Firefox1975

What they are doing is actually the correct way to process a Cash advance within the same tax year. Kudos to them for doing it right.

I am guessing it comes in a cheque to assist with the company cashflow over xmas. i.e not everyone will bank them on xmas eve!