Tax question re overtime/AL

athenajm

Hi, I've handed in my notice to my current employer and I'm due to finish on Friday. I currently earn £16,000 and have an automatic deduction to the student loan company. This month however, I got paid an extra £149.87 for overtime and AL that will be owed to me when I leave.

I've looked at my payslip and out of that £149.87, I only received £87 of it. Does that mean I've paid more tax than I should have? In which case will I get that extra tax/NI back? My tax code hasn't changed but to me it seems like I've been taxed nearly 50% on my 'extra' money.

Sorry if I'm working this out wrong, to be honest the whole tax thing confuses me a bit!

chrisbur

Once you go beyond the allowances on which you pay no tax NI or SL you will in most cases be paying 41% in total which would leave you with 59%. The figures you quote are not quite this but are very close to it. Some roundings do happen that may make a small differance but to check fully you need to give full details of gross tax NI SL and tax code for last two months and from last payslip your taxable gross to date and tax paid to date.

athenajm

Thanks Chrisbur, I don't have all those details to hand, I know my 'normal' pay is £1333/mth and I take home £1117 of that. There is a SL deduction each month (not sure what it is but it was £15 this month).

I was just expecting to pay tax and NI at the same rate as normal as even if my extra pay was usual then it wouldn't take me over the next threashold (IYSWIM). Normally I take home approx 84% of my salary, but if I took home 84% of what I eanred this month then I would have been received about £41 more. OK, it's only a little bit of money but it make a big difference to me right now.

Any

athenajm wrote: »

Thanks Chrisbur, I don't have all those details to hand, I know my 'normal' pay is £1333/mth and I take home £1117 of that. There is a SL deduction each month (not sure what it is but it was £15 this month).

I was just expecting to pay tax and NI at the same rate as normal as even if my extra pay was usual then it wouldn't take me over the next threashold (IYSWIM). Normally I take home approx 84% of my salary, but if I took home 84% of what I eanred this month then I would have been received about £41 more. OK, it's only a little bit of money but it make a big difference to me right now.

You absolutely cannot calculate it the way "normally I receive 84% of my pay net"!!! That is why!!

First £8100 pa, therefore £675 per month is tax free - rest of pay 20%
First £628 per month is NI free - rest of pay 12%
And then some student loan percentace above certain level is deducted.
(note: These are approximate figures, I don't have the tables to hand right now. Also there is a level of pay at which there ishigher tax, and lower NI bracket, but those do not concern you)

So you cannot calculate it as overall % of overall pay, as if you earn £1333.33 per month gross, the amount taxed at 20% with be lower then the amount at earning of £2000 per month gross = therefore the overall % will change, and not stay at 84%!

So your extra amount of £149.70 will be ALL taxed at 20% tax, 12% NI and then some Studen loan deduction, as your tax free amounts were already swallowed by your £1333.33.

Do you see where I am coming from?

athenajm

Ahhhh!!! It all makes sense now! Thanks both of you for being patient and explaining it to me.