Tax and overtime

muay

Hi.
Ok so i work a 40hour week 10-6 nights,but someone is off at work so they have said i can start at 8 so would be doing 8-6 nights for about the next 6 weeks which is a 50 hour week. I get paid the last working day of the month. So is it worth doing or am i just going to lose a load of money in tax.
Thank you.

CLAPTON

you will pay tax on the extra money at 20% and NI of 12% just as you already do for everything you earn over £8,205 per year

whether it's worth it to you, I've no idea

00ec25

basic maths

would you rather work 10 hours overtime get paid £100 and pay 20% tax (£20) so take home £80
or
would you rather not work 10 hours get paid nothing and pay no tax

simples!

Savvy_Sue

Don't forget that if you're repaying a student loan, those repayments will also go up.

You end up with more money. If you divide the extra hours worked by the NET increase, you may or may not think it's worth it.

ashymark

You should be on a cumulative code with it being month 1 unless you have something making you different in HMRC's eyes, and if you are on a cumulative code then it will work itself out in the long run.

You will be charged more tax this month especially as its month 1 but if your hours return to normal month 2,3 etc then the tax will balance itself out in those months.

You will pay more NI which wouldn't balance itself out as its calculated non-cumulatively but yeah, I agree with what has been said by earlier posters.

I'm in the middle of the exactly the same myself at the moment so I am speaking from experience having thought it out and I have a student loan to come off as well.

CLAPTON

ashymark wrote: »

You should be on a cumulative code with it being month 1 unless you have something making you different in HMRC's eyes, and if you are on a cumulative code then it will work itself out in the long run.

You will be charged more tax this month especially as its month 1 but if your hours return to normal month 2,3 etc then the tax will balance itself out in those months.

You will pay more NI which wouldn't balance itself out as its calculated non-cumulatively but yeah, I agree with what has been said by earlier posters.

I'm in the middle of the exactly the same myself at the moment so I am speaking from experience having thought it out and I have a student loan to come off as well.

well you are lucky that you are earning more than 3,540 this month but we don't know that the OP is earning that much

ashymark

I never said I was earning that much, I just purely said that I was in the middle of overtime at the moment and that it results in more tax this month than normal owing to the fact that my pay will be more than normal.

It will still balance itself out in m2, m3 etc as I said, it will only be the NI and student loan that wouldn't.

Mikeyorks

ashymark wrote: »

It will still balance itself out in m2, m3 etc as I said,.

The point being made is that there is no balancing to do - provided the pay in Month 1 doesn't move over into 40%. And £3540 (assuming basic Code) is the break point. If the pay in Month 1 stays in the 20% boundary then there's no balancing in the subsequent months.

ashymark

Mikeyorks wrote: »

The point being made is that there is no balancing to do - provided the pay in Month 1 doesn't move over into 40%. And £3540 (assuming basic Code) is the break point. If the pay in Month 1 stays in the 20% boundary then there's no balancing in the subsequent months.

Of course there is still balancing to do. If you earn 1.5k then you are within 20%, in the same sense, as you say, if you earn 3.5k then you are still within 20%.

The point I am trying to make is that obviously there is will be more tax coming off you if you earn 3.5k than if you earn 1.5k but both will be subject to 20% tax, the only difference being there the actual total of earnings subject to the 20%, but if your earnings then drop back down to its normal level in m2 after overtime then the tax will adjust itself taking on board what was earned in m1 during the overtime as well as any other taxable earnings and that it what I am trying to get across.

I think its the way that I have worded my post that has caused a little confusion more than anything.

Mikeyorks

Throw away the spade?

The only 'adjustment' is if you go into the 40% band temporarily (as you would above £3540 in Month 1) and then drop back into the 20% band overall - in subsequent months.

If you stay within 20% - with the overtime - there is no adjustment as everything above PA continues at the same 20% rate.

CLAPTON

ashymark wrote: »

Of course there is still balancing to do. If you earn 1.5k then you are within 20%, in the same sense, as you say, if you earn 3.5k then you are still within 20%.

The point I am trying to make is that obviously there is will be more tax coming off you if you earn 3.5k than if you earn 1.5k but both will be subject to 20% tax, the only difference being there the actual total of earnings subject to the 20%, but if your earnings then drop back down to its normal level in m2 after overtime then the tax will adjust itself taking on board what was earned in m1 during the overtime as well as any other taxable earnings and that it what I am trying to get across.

I think its the way that I have worded my post that has caused a little confusion more than anything.

no

there is no tax rebate or adjustment if there was no 40% tax or unless the subsequent pay falls to below the 20% band ie to below 675 per month
as the great man said; 'just do the maths'