Tax question

Coco_Loco

Hello,


Not sure if this is in the right forum or not, but will guess the admins will put it where it should be. I have a question as to what tax I should pay on a bonus I am receiving.


I handed my notice in with my old employer back in January, and left at the end of Feb 2015. I agreed that I would continue to work on a couple of deals on the basis that I would be paid commission in April. That bomus is now ready to be paid, lets say its £10k. My old employer has stated that the figure I will receive will be about £5,500, with nearly £4k in tax and £450 NIC. I was led to believe that they could only deduct Basic Rate @ 20%, and it would be up to me to declare as additional income through Self Assessment later this FY.


I earn at the 40% tax band normally, can someone please shed some light into this please and let me know whether I am right or they are? As the difference is about £2k.


Many thanks in advance


Coco

CLAPTON

Coco_Loco wrote: »

Hello,


Not sure if this is in the right forum or not, but will guess the admins will put it where it should be. I have a question as to what tax I should pay on a bonus I am receiving.


I handed my notice in with my old employer back in January, and left at the end of Feb 2015. I agreed that I would continue to work on a couple of deals on the basis that I would be paid commission in April. That bomus is now ready to be paid, lets say its £10k. My old employer has stated that the figure I will receive will be about £5,500, with nearly £4k in tax and £450 NIC. I was led to believe that they could only deduct Basic Rate @ 20%, and it would be up to me to declare as additional income through Self Assessment later this FY.


I earn at the 40% tax band normally, can someone please shed some light into this please and let me know whether I am right or they are? As the difference is about £2k.


Many thanks in advance


Coco

they seem to be treating you as an employee being paid 10,000 in april (tax year 2015-16)
so, without actually working it out, it seems about right

Coco_Loco

CLAPTON wrote: »

they seem to be treating you as an employee being paid 10,000 in april (tax year 2015-16)
so, without actually working it out, it seems about right

even though I have had my P45 and am not an employee at all through the 15/16 tax year?

zygurat789

Coco_Loco wrote: »

even though I have had my P45 and am not an employee at all through the 15/16 tax year?

The status of an "employee" is not determined by law nor by you but by a series of yes/no situations. Employers can get into all sorts of problems, their safest option is to class you as an employee for that bit of income. If you get a p45 from them you will be able to get any overpaid tax back from them at the end of the tax year.

chrisbur

Your employer should use the tax code 0T on a week 1/month 1 basis. Deyails are here https://www.gov.uk/employee-leaving
just over half way down.
Do you have the exact figures?
Were you paid weekly or monthly?

Coco_Loco

chrisbur wrote: »

just over half way down.
Do you have the exact figures?
Were you paid weekly or monthly?

Paid Monthly, and the bonus is £9112.50


Thanks for you help and everyone else too

chrisbur

Coco_Loco wrote: »

Paid Monthly, and the bonus is £9112.50


Thanks for you help and everyone else too

Using tax code 0T I would expect a tax figure of about £3115.00.
Depending on your other taxable income for this year this figure could be to high or to low.
National insurance would probably be about £455 This seems to me to fall into the category of a final payment of wages so would be done on a monthly earnings period.

Your old employer should advise you of these details but no P45 should be issued.

Coco_Loco

Ok thanks for your help, its much appreciated