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

LeeSouthEast

Overtime tax isn't fun. My deductions last month came to over £1,000

I hate the tax man very much.

f1982

I have a similar situation- and came here to try and find some answers because the lady in accounts at work basically told me the opposite of what people are saying here- so can someone clarify please?
I'm sure this will help others as well as me.

The situation-
I earn approx £1350 a month, but I have had a massive amount of overtime which has not been paid for the last 3 months, and my gross pay for the month just gone was over £4000 (yay!!).
However after tax and NI my net pay was £2*** (can't remember the exact figure right now. Think it was about 2.5k).

I understand that the 40% tax rate comes into effect because the tax is worked on the assumption you are going to earn that amound every month (I wish!!). But the accounts dept lady basically said I wouldn't get that tax back.
But as I understand it, I am due to pay 22% of my total income over the year, so as I earn my normal monthly rate again the tax on that sould be much lower to 'balance out'. The result being that the tax I pay on April's wage bill should be the exact amount to make my tax an averaged 22% over the whole year's wages.

Is this correct?
Many thanks for any advice you have.

noh

Yes you are correct.
She is wrong.

By the way the tax rate is 20% not 22%

trevormax

f1982 wrote: »

I have a similar situation- and came here to try and find some answers because the lady in accounts at work basically told me the opposite of what people are saying here- so can someone clarify please?
I'm sure this will help others as well as me.

The situation-
I earn approx £1350 a month, but I have had a massive amount of overtime which has not been paid for the last 3 months, and my gross pay for the month just gone was over £4000 (yay!!).
However after tax and NI my net pay was £2*** (can't remember the exact figure right now. Think it was about 2.5k).

I understand that the 40% tax rate comes into effect because the tax is worked on the assumption you are going to earn that amound every month (I wish!!). But the accounts dept lady basically said I wouldn't get that tax back.
But as I understand it, I am due to pay 22% of my total income over the year, so as I earn my normal monthly rate again the tax on that sould be much lower to 'balance out'. The result being that the tax I pay on April's wage bill should be the exact amount to make my tax an averaged 22% over the whole year's wages.

Is this correct?
Many thanks for any advice you have.

Almost correct. Basic rate tax is now 20%. As long as you are on a cumulative tax code, it will correct its self over the coming months and by the end of the tax year, it should be the correct amount.

If you are on a week 1 / month 1 code then it will not correct its self. If you are unable to get onto a cumulative code by the end of the tax year, you will need to claim for overpaid tax after 5th April 2010.

f1982

trevormax wrote: »

Almost correct. Basic rate tax is now 20%. As long as you are on a cumulative tax code, it will correct its self over the coming months and by the end of the tax year, it should be the correct amount.

If you are on a week 1 / month 1 code then it will not correct its self. If you are unable to get onto a cumulative code by the end of the tax year, you will need to claim for overpaid tax after 5th April 2010.

Thanks, and thanks to Noh above also.



Can you tell me how I know if I am on a cumulative tax code or not though?

Edit: I think I have found the answer. Its if you have an emergency tax code and the code will probably have W1 or M1 (etc) after it.

jem16

f1982 wrote: »

Edit: I think I have found the answer. Its if you have an emergency tax code and the code will probably have W1 or M1 (etc) after it.

That's correct.