Tax on Bonuses

droppedbiro

Hi folks, I work for a very small company and would like a bit of advice!

I'm an agency employee, my boss wants to give me a bonus external to this but we are unsure of the correct tax procedures. I understand that NI and PAYE need to be paid but how much and by whom? any ideas?!?

Cheers!!!

GROSS WEEKLY WAGE: 337.5
BONUS: 400

zygurat789

droppedbiro wrote: »

Hi folks, I work for a very small company and would like a bit of advice!

I'm an agency employee, my boss wants to give me a bonus external to this but we are unsure of the correct tax procedures. I understand that NI and PAYE need to be paid but how much and by whom? any ideas?!?

Cheers!!!

GROSS WEEKLY WAGE: 337.5
BONUS: 400

When you say boss, do you mean the client of your employer, the agency?
I would be surprised if the agency agreement with their client, for whom you are doing some work, precludes this arrangement.
However, you could be taken onto the clients books as an employee. Your tax code would be BR the NI would be 12% on all above £149 each week, so if you were to be paid £133 pw for three weeks no NI payable.
All this would go through the clients payroll system, he does have one doesn't he?

droppedbiro

By boss I meant the client of the agency. It's going to be done by paying the agency, goodness knows how much they will try and get their mitts on - the bonus amount has now risen to 600, I expect to see about a tenner!

[Deleted User]

Well whichever way you look at it, it will cost them more than £600.

The simplest thing for them to do is treat it as a taxable bonus so that you suffer the tax and NI, of course even if the agency agree to pass the full value of the bonus on to you (which to be fair I have seen done when I worked in recruitment) this would attract 13.8% employers NI which i'm sure the agency will charge back to the client.

If they want you to benefit the from the full £600 the payroll department will be able to do a Net to Gross calculation, but then they will also have to pay 13.8% NI 20% tax then employee NI at 12%.

droppedbiro

Deleted_User wrote: »

Well whichever way you look at it, it will cost them more than £600.

The simplest thing for them to do is treat it as a taxable bonus so that you suffer the tax and NI, of course even if the agency agree to pass the full value of the bonus on to you (which to be fair I have seen done when I worked in recruitment) this would attract 13.8% employers NI which i'm sure the agency will charge back to the client.

If they want you to benefit the from the full £600 the payroll department will be able to do a Net to Gross calculation, but then they will also have to pay 13.8% NI 20% tax then employee NI at 12%.

Great info, thank you. I say great, but not so much financially great news. *sigh*