Change of jobs, worried about the tax / outstanding bonus

djwood1

Hello,

Here's my current situation which I'm hoping you can help with.

- Left my previous employer 2 weeks ago
- 20% tax payer, company car and fuel card
- Paid on 15/7
- However there's a bonus outstanding which will be paid on 15/8

New Role...

- Started almost immediately afterwards
- 40% tax
- Car allowance (so not BIK to pay)
- Will be paid on 25/8

Here lies my confusion.

- What tax will I pay on my outstanding bonus, 20/40%?
- I presume my new employer will set up my tax code however
I'm worried that my outstanding bonus may be taxed at 40%
- Is it worth supplying my new employer with my P45?

Ultimately I want to ensure my first salary at my new job is paid correctly. I want to ensure I see the BIK saving of the car and fuel, car allowance and salary tax set up correctly - is there anyway I can check this?

Plus, I want to ensure my outstanding bonus is only taxed at 20% too.

Can anyone help?

Thanks

xylophone

A P45 has been issued to you by your old employer?

If so, this may be relevant. http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/employers/p45-employee-leaves.htm

"Q. Can I issue another P45 if I make further payments?
A. You must not issue a further P45 under any circumstances.

If you have to make payments after the P45 has been issued then you should give a letter to your employee confirming the payment details. A copy of this letter should also be sent to your PAYE tax office.

You should include on this letter:

the date of payment
the gross amount of payment
the amount of PAYE and NICs deducted
You should deduct tax using code 0T and deduct NICs using their usual earnings period if the payment represents a final salary or wage.

However, where a payment after leaving is in the form of securities, an interest in securities, or securities options you should deduct tax using a BR tax code non - cumulatively.

If the payment is an irregular payment (e.g. accrued holiday pay or an unexpected bonus) calculate the NICs using the weekly earnings period. You can get more information from Chapter 1 of the Helpbook CWG2 (2011) Employer Further Guide to PAYE and NICs."

In your position I would telephone HMRC - 7.45 am is said to be a good time - and discuss the situation.

Savvy_Sue

However, if you haven't yet had your P45 because your previous job know the bonus is still be paid, then I don't think there is any way of getting your new employer to use the 'right' tax code, ie the one they'll be able to use once you've given them a P45 from your previous job.

It should all settle down subsequently though, and although you say you don't want your final bonus taxed at 40% you need to remember that it's not one payment rather than another which is taxed at any particular rate. The rate of tax you pay depends on how much your taxable income is over the course of a full tax year.

agrinnall

If your marginal rate of tax will be 40% without including your bonus then it's pretty much guaranteed that the amount of the bonus itself will be taxed at 40%, there's really nothing you can do about that other than take action (such as pension payments) to take yourself out of higher rate tax again. The bad news is that if it's paid separately to the final salary from your old job you may also end up paying 12% NI on it rather than 2%, and I'm not sure if it will be possible to recover that.

purdyoaten

djwood1 wrote: »

Hello,


- Is it worth supplying my new employer with my P45?


Thanks

Really don't understand this! If you do not give your new employer your form P45 they will be obliged to deduct 20% of all of your wages, including the car allowance - no tax free allowance.

sheramber

The code number on your P45 will include the restriction for the BIK in the job you are leaving.

Only HMRC can amend your code number for the fact that you no longer have that benefit.

So, your new job salary will not reflect the saving for no BIK for the remaining months until a new code number is issued to your new employer.