Will £12k BONUS pay affect tax deducted from my savings?

alexh

I too have a 2007 tax code of 476L rather than 522L not sure why but I *think* it is because of the "free" health care I get with work.

mr_fishbulb

tom188 wrote: »

basically, if at the end of the tax year your total income (salary, bonus, savings and investments income) is more than about £4760+£34600=£39360 then you will have to declare this and pay HMRC the higher rate tax due, normally through filling in the tax return.

You pay the extra tax direct to HMRC so there is no need to get your bank/bs to change anything.

I'm likely to be in the same position as Goldfinger - although I'm on a lower salary and will probably get a lower bonus, I've worked quite a bit of overtime this year which is taking me close to the threashold.

Will the HMRC send a tax return automatically, or will I need to contact them myself?

Also will I need to fill in a for so they can make additional topups to my pension? Currently they have been giving the 22% top-up.

CLAPTON

mr_fishbulb wrote: »

I'm likely to be in the same position as Goldfinger - although I'm on a lower salary and will probably get a lower bonus, I've worked quite a bit of overtime this year which is taking me close to the threashold.

Will the HMRC send a tax return automatically, or will I need to contact them myself?

Also will I need to fill in a for so they can make additional topups to my pension? Currently they have been giving the 22% top-up.

If you go over the 40% threshold and you have interest on savings then it is your responsibility to tell the HMRC so you need to ask them for a tax form. They will not in general automatically send you one.

If you contribute to a company pension scheme then your contibutions are automatically paid from your gross salary and so you are given tax relief at your highest rate so there is no action you need to take.

If you employer allows you to make additional pension contributions then you may consider it is worthwhile as you will get 40% tax relief rather than the 22% tax relief. But you need to check its worthwhile in your situaion.

mr_fishbulb

CLAPTON wrote: »

If you employer allows you to make additional pension contributions then you may consider it is worthwhile as you will get 40% tax relief rather than the 22% tax relief. But you need to check its worthwhile in your situaion.

Cheers for the reply.

In my case I'm not sure how much of a bonus I'll be getting, and I have to tell my work if I want it to be paid into a pension before I know. Plus I'm saving for a house deposit (when the market sorts itself out) so I'll take the cash for now.

dunstonh

If you are in receipt of working/childrens tax credits, these will also be reduced because of the bonus. Indeed, if you are not careful you could end up having to pay some back.

If that is the case, then pension contributions look even more favourable as it wouldnt just be the higher rate tax relief but the increase in tax credits as well.

Primrose

You've obviously received your bonus by now but next time if you're lucky enough to receive another big one, you could consider having your employer pay a large chunk of it into your pension scheme - or at least any proportion of it that might trigger putting you into a higher tax paying band.