tax on overtime (help please)

tpereira

I have been working a lot of extra hours. (about 120 hours monthly)
but the net pay i get does not seem to be rigth.
saturdays are paid at time and alf,sundays at double time.

are overtime hours taxed at a higher rate or as normal time ?????

System

If your income is less than about £36000/year then you will be taxed at 22% on your overtime. The rest of your pay will seem to be taxed at a lesser percentage rate because your tax free allowance (£4745/yr = £395/mth) and 10% band (£2020/yr = £168/mth) will have been included in that.

cash99

Overtime is taxed at the same rate as everything else, however your tax free allowances and the amount taxed at 10% will be used up on you regular salary. e.g.

Salary per annum £10000
Personal allowance £4745
Taxed at 10% £2020
Taxed at 22% £3235

If you get overtime as well this added on to the top off your income and is taxed in full at 22%. When you go over approximately £36k gross salary you will pay 40% tax.

The same applies for national insurance contributions ( you contribution free allowance is used on you regular salary) and you pay 11% on your overtime, up to a total income of about £2.6 per month, and just 1% above £2.6k.

tpereira

thanks guys
so if i do a overtime that equals a £1000 they will tax me about income tax 22%=£220
N.I 10%=£100
total £320

from £1000 worth of overtime i will keep roughly £680
as long iam basic tax payer ??? is that it??? a bit more a bit less ???

robnye

tpereira wrote:

thanks guys
so if i do a overtime that equals a £1000 they will tax me about income tax 22%=£220
N.I 10%=£100
total £320

from £1000 worth of overtime i will keep roughly £680
as long iam basic tax payer ??? is that it??? a bit more a bit less ???

yep.... about right

Xbigman

I think NI is 11%.

I work it out that you keep two thirds of any overtime you earn unless very low or very high paid.
Regards



X

Paul_Varjak

tpereira wrote:

thanks guys
so if i do a overtime that equals a £1000 they will tax me about income tax 22%=£220

Yes, assuming that your basic pay is withing the basic rate (22%) band and your extra pay does not take you into a higher (40%) band.