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High tax on basic & bonus - is this correct?

djwood1
Posts: 31 Forumite
Hello
I've recently started a new job, here are the details:
£40,271.04 Basic
I've only been here for 3 months, today I received my first bonus of £4304.
Total earnings for October
£7,660.27
Deductions:
Tax @ £2,259.45
NI @ 425.76
Student Loan @ 559
£3,244.21
Amount Paid
£4,416.06
My net wage is normally £2320 meaning my net bonus payment was only £2096.
The tax seems very high, is this a case of the HMRC assuming I'm earning 90k and applying increased tax or is this expected? My tax code hasn't changed from 824T
Thanks
I've recently started a new job, here are the details:
£40,271.04 Basic
I've only been here for 3 months, today I received my first bonus of £4304.
Total earnings for October
£7,660.27
Deductions:
Tax @ £2,259.45
NI @ 425.76
Student Loan @ 559
£3,244.21
Amount Paid
£4,416.06
My net wage is normally £2320 meaning my net bonus payment was only £2096.
The tax seems very high, is this a case of the HMRC assuming I'm earning 90k and applying increased tax or is this expected? My tax code hasn't changed from 824T
Thanks
0
Comments
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This suggests to me that your tax code is being applied on a month 1 basis though cannot say for certain without knowing your year to date taxable earnings.0
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are there any letters after the tax code 824T (like M1 or noncum etc)?0
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No letters after 824T. The first month I was on 1060L then it went to a M1 code, this is the first month that I've been on my 824T after many hours spent onto HMRC.
Being really simplistic here.....my basic per month is £3350 which amounts to £550 tax deductions.
My total net for this month was £7600 so roughly double so I imagined the tax to be circa £1100-1400, not £2200.
It's probably a lot more complicated than than!0 -
No letters after 824T. The first month I was on 1060L then it went to a M1 code, this is the first month that I've been on my 824T after many hours spent onto HMRC.
Being really simplistic here.....my basic per month is £3350 which amounts to £550 tax deductions.
My total net for this month was £7600 so roughly double so I imagined the tax to be circa £1100-1400, not £2200.
It's probably a lot more complicated than than!
Can you advise your year to date earnings?0 -
YTD
Gross: 30,196
Tax Payable: 30,196
Tax: 6,445
Hope this helps.0 -
YTD
Gross: 30,196
Tax Payable: 30,196
Tax: 6,445
Hope this helps.
Your earnings are somewhat higher than I estimated from your first post, I assume that your old employment was either a higher basic than your new employment or you received bonus there as well. The tax code of 824T is not being applied on a month 1 basis. I assume you know why this tax code is being used.
Regarding tax your earnings so far this year, assuming 824T is your correct tax code put the tax figure of 6445 as being the correct tax. The following figures have been rounded a bit and assume your last payment was for month 7.
£30196 less £4812 (7/12 of £8249 tax free allowance) = £25384
Of this £18541 is at 20% = £3708 and the rest £6843 is at 40% =£2736
£3708 = £2736 = £6444
Tax Your earnings are well into the 40% tax band so tax on your bonus is all at 40% £1722
National insurance Your earnings before the bonus are close to the upper earnings limit ( this is the point where NI changes from 12% deduction to 2% deduction) so quite a bit is at 2% but about £135 at 12% £100
Student loan at 9% £387
£4304 - £1722 - £100 - £387 = £2095
So assuming 824T is your correct tax code, you are on month 7 and you have no other income then all looks correct.0 -
Your earnings are well into the 40% tax band so tax on your bonus is all at 40% £1722
Your earnings before the bonus are close to the upper earnings limit so quite a bit is at 2% but about £135 at 12% £100
Student loan at 9% £387
£4304 - £1722 - £100 - £387 = £2095
For the sake of clarity the highlighted bit of chrisbur's post refers to National Insurance.0 -
Being really simplistic here.....my basic per month is £3350 which amounts to £550 tax deductions.
My total net for this month was £7600 so roughly double so I imagined the tax to be circa £1100-1400, not £2200.
It's probably a lot more complicated than than!loose does not rhyme with choose but lose does and is the word you meant to write.0
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