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Are Annual Bonuses Taxed?
frothy-coffee_2
Posts: 157 Forumite
in Cutting tax
If so, at what rate?
0
Comments
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Indeed they're taxed. The rate depends on your current marginal rate (20% / 40% / 50%)
What's your annual income (gross) and the level of bonus (gross)If you want to test the depth of the water .........don't use both feet !0 -
And NI at 12% or 2%0
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taxed exactly like 'ordinary' salary which is of course what they are0
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Indeed they're taxed. The rate depends on your current marginal rate (20% / 40% / 50%)
What's your annual income (gross) and the level of bonus (gross)
Not necessarily.
If the bonus takes you into a higher tax bracket, then you will have to pay it at that rate (rather than your "current", pre bonus rate).
(Unless you can salt it away of course, arry style.)0 -
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frothy-coffee wrote: »Hmmmm,
The reason I ask is because I've heard conflicting reports as to whether bankers bonuses are taxed or not?
Some say yes, and some say no!
lets suppose you earn 30,000 a year
and lets say your employer pays you 7475 per annum plus a bonus of 22,525
do you think you will avoid tax?0 -
If the bonus takes you into a higher tax bracket, then you will have to pay it at that rate
Which you then get back. Either over the next few months - or from HMRC if your employer is daft enough to pay it in the closing month(s) of the tax year. And the PAYE system then doesn't have enough time to self adjust.
Which is why I carefully used the phrase 'marginal rate'. Which is the highest rate at which you pay tax, depending on your total gross income.If you want to test the depth of the water .........don't use both feet !0 -
lets suppose you earn 30,000 a year
and lets say your employer pays you 7475 per annum plus a bonus of 22,525
do you think you will avoid tax?
I'm not that daft! I do realise you can't do that. People were doing a similar thing to that a few years ago to avoid stamp duty with house purchases.
But if tax is payable on bankers bonuses, why are politicians and others, calling for a bankers bonus tax?0 -
frothy-coffee wrote: »But if tax is payable on bankers bonuses, why are politicians and others, calling for a bankers bonus tax?
To get their faces on TV?0
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