Overtime - TAX is so much its almost not worth doing any

Xtreme

All
i am looking for any solution here , i work am on 24/7 call-out and some months i do 30 hours overtime and get £X but sometimes not often i work a bit more like last month i did 60 hours roughly , and due to the total gross salary for the moth pushing me into the higher tax bracket i only received £100 extra'ish for 30 more hours of work .....


Thats Crazy .. is there any way around this , any way of decreasing the amout of tax i am paying on overtime ..any suggestions appreciated

jem16

It much depends on what you will earn overall in a year as your overtime varies.

In one month the extra overtime may well push you into higher rate tax - a bit like getting a bonus does. However if the amount you earn in a whole year is less than £39,825 you would not be paying higher rate tax and would probably be due a refund on tax paid.

CLAPTON

without seeing the numbers its difficult to make specific comments.
But unless you continue to earn at that rate, the tax system will automatically adjust your tax so next month you will pay less tax than usual.

noh

If you really are only getting £100 extra for 30 hours that means your salary is roughly £5.64 an hour before tax. Are you sure of your figures?
Anyway as the other posters say the PAYE system will adjust the tax taken in months when you earn less than the 40% threshold.

Nigel

MarkyMarkD

It simply doesn't work like you are saying, Xtreme.

The absolute maximum rate of tax you will pay on any additional income is 40%. You don't have your whole pay pushed into a higher tax bracket - just the marginal amount.

And if your pay in subsequent months goes below the 40% band again, you will get the overpayment rebated by paying lower tax in those months.

Xtreme

Hi All thanks for your replies

Sorry i was just quiting figures in general , but it does feel like i worked loads of hours extra and the benefits are marginal.....

i was really after some advice on how to reduce my tax in any way , is might be mistaken , but i read somewhere that overtime etc was not going to be taxed in the normal way ..but i might have just read that somewhere on the Internet , as i looked on the UK tax website and it doesn't mention anything at all about it ...

or if you pay x to your pension plan , that amt is not taxable , or endowment etc .. just looking for general ideas on how to not give so much legally to the tax man .....

LittleVoice

So now you know that overtime is taxed in the normal way.

Payments into a pension plan can reduce your tax bill, but then the money isn't available to you to do with as you wish right now.

You've probably read this page - http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/BeginnersGuideToPensions/DG_10026927

MarkyMarkD

It's better to think that the cost to you (in net pay) of making a pension contribution is lower than it otherwise would be, rather than thinking that paying a pension contribution will cut the tax you pay.

In other words, if you pay 40% tax, you can pay £100 into your pension and it will only cost you £60 off your net pay.

Calkeabbey

im probably being greedy! but it just seems like alot of tax!
normally, before tax ill earn 1,383 and this month i have an added overtime of 750. which has jumped it up to 2,103 before tax. i am left with a take home pay of 1,575.34 after 296.60 in tax, 151.82 to NI and 79.24 into my pension. is this right? my maths is terrible and i know nothing about tax rates anyway, just seems like alot of money to loose out on.
any advice welcome!

CLAPTON

Calkeabbey wrote: »

im probably being greedy! but it just seems like alot of tax!
normally, before tax ill earn 1,383 and this month i have an added overtime of 750. which has jumped it up to 2,103 before tax. i am left with a take home pay of 1,575.34 after 296.60 in tax, 151.82 to NI and 79.24 into my pension. is this right? my maths is terrible and i know nothing about tax rates anyway, just seems like alot of money to loose out on.
any advice welcome!

yes it seems correct

something like this
gross pay 2103

taxable pay =2103-79.24 (pension) = 2023
less personal allowance of 540 (i.e. 6475/12)
so 20% on 1484 = 296 in tax

Ni is based on gross pay less minimum 476 = 1627 at 9.4% = 152

MrCarrot

Calkeabbey wrote: »

im probably being greedy! but it just seems like alot of tax!

I wouldn't say you're being greedy, let's not forget it's your hard earned money afterall.