Best month to be paid a bonus

Lowermax

Hi,

I'm due to be paid a bonus. Am I better to be paid this before the end of the financial year or does it not matter if i'm paid in April?

The bonus wont push me into the 40% tax bracket, but if i got paid my normal wage plus the bonus would this effect the amount of tax i pay if it was paid at the start of the tax year?

Torry_Quine

No it won't effect the amount of tax you pay overall as you have an annual allowance. If you get it early in the tax year then you will pay extra but that will correct itself in the following months.

Lowermax

Thanks Torry!

So it will probably be better getting it paid at the end of March so i don't pay extra tax?

Torry_Quine

Lowermax wrote: »

Thanks Torry!

So it will probably be better getting it paid at the end of March so i don't pay extra tax?

You will pay extra tax at 20% though if it doesn't push you into the higher band.

Darksparkle

Plus an additional 12% NIC.

martinsurrey

Lowermax wrote: »

Thanks Torry!

So it will probably be better getting it paid at the end of March so i don't pay extra tax?

Yes, March is the "best" month to get paid a bonus.

overall it doesn't matter as it all gets evened out by the end of the tax year, but if you get a large bonus in April the way tax calculations work you would pay income tax as if you got that bonus every month.

Then in May when you didn't get a bonus you would get some of the tax you paid in April back (well offset against your may tax)

Lowermax

Thanks a lot for the advice! Sounds like being paid in March is the best time, and i will be taxed 32% in total (Normal tax and NIC).

Guest101

Honestly it makes no difference, your allowance is annual and will always be evened out

Lowermax

Guest101 wrote: »

Honestly it makes no difference, your allowance is annual and will always be evened out

Yes but if i'm wanting as big a lump sum as possible, then it is better to be paid at the end of the tax year so the system doesn't get confused, thats the way i'm understanding it anyway.

chrisbur

Lowermax wrote: »

Thanks a lot for the advice! Sounds like being paid in March is the best time, and i will be taxed 32% in total (Normal tax and NIC).

National insurance will be assessed on the total you get for the month. Nothing due on £672 then 12% deducted on £672 to £3583 and 2% on anything over £3583.

Lowermax

chrisbur wrote: »

National insurance will be assessed on the total you get for the month. Nothing due on £672 then 12% deducted on £672 to £3583 and 2% on anything over £3583.

Thanks for the breakdown!