Bonus pushes me into higher tax bracket

Dunx76

Hope someone can answer this for me.

This tax year I'm going to be getting a reasonable size bonus that will push me into the higher tax bracket. My normal pay is somewhere bellow the threshold for the higher bracket.

My questions are these.

1. Will this one off bonus mean my tax code changes to a higher rate one for the next tax year.
2. If the answer to 1 is yes. How will this effect my normal monthly pay next year, which will be below the higher rate threshold for the who year. Does it mean I'll pay more tax and have to claim it back or is the tax system 'intelligent' enough to understand my normal pay is lower rate and the bonus was a one off.

Thanks.

purdyoaten

Your higher rate status has no bearing whatsoever on your code number unless the £100k limit is crossed as a result of the bonus. Without figures it is impossible to elaborate.

Dunx76

purdyoaten wrote: »

Your higher rate status has no bearing whatsoever on your code number unless the £100k limit is crossed as a result of the bonus. Without figures it is impossible to elaborate.

I see. Shows how little I know about the tax system. The higher rate I was talking about was the 40% rate. So would I be right in saying that in every tax year you pay the 20% rate up until the point you reach the 40% threshold, then start paying the higher rate until the end of that tax year. So the amount you earn in the previous year has no effect at all?

zygurat789

Dunx76 wrote: »

I see. Shows how little I know about the tax system. The higher rate I was talking about was the 40% rate. So would I be right in saying that in every tax year you pay the 20% rate up until the point you reach the 40% threshold, then start paying the higher rate until the end of that tax year. So the amount you earn in the previous year has no effect at all?

No and yes, The amount you earned in the previous TAX year has no effect on the current tax year unless they are adding on a previously unpaid ;iability.
The tax tables give you this pay periods (whether that be weekly, fortnightly,four weekly or monthltly) tax free allowances so that if you will pay tax at 40% for the year, then you are paying at 40% each period.

jennifernil

However.....

If your bonus comes late in the tax year, and your pay otherwise would be below the 40% threshold, you would not pay any 40% tax till you get that bonus.

CLAPTON

Dunx76 wrote: »

I see. Shows how little I know about the tax system. The higher rate I was talking about was the 40% rate. So would I be right in saying that in every tax year you pay the 20% rate up until the point you reach the 40% threshold, then start paying the higher rate until the end of that tax year. So the amount you earn in the previous year has no effect at all?

how much do you earn
how much is the bonus
how much do you pay into your pension