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Tax on bonus payments
InhaleMood
Posts: 308 Forumite
Hi,
I work in a role where I get discretionary bonus payments on a quarterly basis.
How do I work out what tax I should pay? It seems like they tax you as if you are going to be earning that amount every month.
Do I need to let the HMRC know the situation or do they rectify it automatically?
Apologies if this is in the wrong place!!!
Tanya
I work in a role where I get discretionary bonus payments on a quarterly basis.
How do I work out what tax I should pay? It seems like they tax you as if you are going to be earning that amount every month.
Do I need to let the HMRC know the situation or do they rectify it automatically?
Apologies if this is in the wrong place!!!
Tanya
0
Comments
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You should be taxed at your normal rate ie 20% unless it takes you into the 40% bracket.
Having said that I got one in March last year and about 35% was taken off. When I called my payroll, they explained I had an M1 code on my tax allowance which as you say means it is treated as though I was paid that amount every month!
Give your payroll team a quick call and ask if there is anything they can do. They might refer you to good old HMRC. It may take an age to get a call through to them, but I've always found them really helpful when someone finally answers!Bossymoo
Away with the fairies :beer:0 -
I think you are likely to pay 12 percent NI too....make the most of it, we are only here for the weekend.
and we will never, ever return.0 -
I think you are likely to pay 12 percent NI too....
NI could work in the OP's favour, but only if the bonus is enough to take that period's past the Upper Earnings Limit, in which case anything above the UEL would only attract employees NI at the 2% rate rather then 12%. If it's not the case then the amount paid in NI is likely to be the same as if the bonus had been spread across three months.0 -
blondebubbles wrote: »Usually if you overpay in one month because of a bonus then it's rectified the following month.
It won't however if you are on a wk1/mth1 code.
Sorry, how would I know if I am on a wk1/mth1 code?
Payroll have pointed me to HMRC but I don't have the time to call during the day!
Thanks all!0 -
Mine says 910L / 0???0
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tanyasharma wrote: »Mine says 910L / 0???
0 is usually a cumulative code but to be certain just ask your payroll dept. Is this your code for this tax year? If so do you know why it is a bit low, 1000L is the starting point for this year.0 -
0 is usually a cumulative code but to be certain just ask your payroll dept. Is this your code for this tax year? If so do you know why it is a bit low, 1000L is the starting point for this year.
Agreed it's low, but many people won't have had a 2014/5 payslip yet so that may be the tax code from March.0
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