Working out tax on bonuses

emzky

Hi, just curious to know if anyone can help. I'm wondering how I go about working out how much tax is likely to be taken on my bonues Just wondering how I'd work out for the next years bonuses?

molerat

A lot depends on what tax bracket you are in, how often the bonuses are paid, how much they are and if you are paying back a student loan. As a rough guide if you are a basic rate tax payer expect a deduction of 32%, 20% tax and 12% NI so for each £100 bonus you get £68 in you pay packet Large bonuses earlier in the year will attract a smaller NI deduction and a large short term tax deduction, some of which may be refunded over the year.

CLAPTON

emzky wrote: »

Hi, just curious to know if anyone can help. I'm wondering how I go about working out how much tax is likely to be taken on my bonues Just wondering how I'd work out for the next years bonuses?

you deduct tax and NI from the gross bonus amount as if it were simply ordinary pay

agrinnall

molerat wrote: »

Large bonuses earlier in the year will attract a smaller NI deduction and a large short term tax deduction, some of which may be refunded over the year.

I don't think so, can you explain why you say this?

getmore4less

agrinnall wrote: »

I don't think so, can you explain why you say this?

NI is based on the pay period, once over the upper earnings limit the rest is NI at 2% not 12%

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

for each month the upper earnings limit is £3532 anything over that gets 2% NI.


Any month with a large bonus can get reduces NI compared to spreading it out over the year, not just early months.

Uneven Distribution of wages can reduce the NI, pay between £487 and £672 no NI but get the benifits, then pay a big bonus one month to go over the £3532

A bonus early in the year may get taxed more if it takes you into the 40% band for that month accumulated allowances, but that will result in a reduced tax in following months as the allowances for the months are added onto the total tax due at that month.

agrinnall

gm4l, absolutely, but it makes no difference to NI which month the bonus is paid in as far as I'm aware, hence my question to molerat.