'Gift' from employer, tax?

Brighty

Hi all

Was told yesterday that the company i work PAYE for has been sold off/bought out.

Today we all received a letter titled 'loyalty bonus'stating

"As you are aware, the shareholders have sold their shares. We would like to thankyou for your hard work over the years and give you a financial gift of £x, which will be paid into your account through payroll"

What would be the tax situation with this 'gift', it's pretty much 1/12 of my yearly salary, so i'm effectively being paid double this month, maybe. Due to be paid 27th of this month as usual, but bonus letter says it will be paid no later than 10th of June, so may get it this month or early next, separate from my usual wage

I'm a basic rate tax payer, and even with this 1 off payment, i won't go into the 40% bracket, but will the PAYE system assume this is my new regular salary and take a big 40% bite out of it? (even though i'll get it back over the coming months)

Cheers

Brighty

TheCyclingProgrammer

It will be taxed via PAYE like the rest of your salary. Whether any portion of it gets taxed at 40% for that month (even if you then get it back) depends on your total pay to date.

agrinnall

Without actual numbers nobody can be sure, but because this is only month 2 of the tax year it's quite possible that some higher rate tax will be applied, but you'll probably get that back over subsequent months.

Brighty

Yes, numbers would help wouldn't they, lol
My monthly wage is £2975, bonus is £3000, tax code 1265M

Dazed_and_confused

If the bonus is paid in month 2 of the tax year (month to 5 June) then you will be, temporarily, earning at a rate of £53,700/year so some higher rate tax will be due that month.

Once you revert to £2975/month you will soon revert back to just basic rate tax.

By month 4 you will be earning £44700/year back within the basic rate tax band.

Brighty

Hi all

Received bonus earlier this month and have just received pay slip for normal June pay day

Can someone please cast an eye over the numbers to let me know if i've over or under paid any tax. am i now all square, or will i get more or less than my usual take home in the next few months?

£3000 Bonus received 10th June - Actual amount paid into my account £2185.33, no pay slip received at the time

Payslip received today states
Salary £2975.34
Bonus £3000
Deductions
PAYE £1061.40
Nat Ins £412.91
Advance £2185.33
Pension £19.88
Net £2295.82 (pretty much my normal take home)
YTD
Gross Taxable £11926.02
PAYE Tax £1892.40
Nat Ins £963.79
Tax Code 1265M

Thanks

Regards

Brighty

Dazed_and_confused

What tax period does it show on the payslip, M3, M03, W8, W08, W9, W09, W10, W11, W12???

Brighty

Says 'Month 3'
We get paid monthly, 25th of the month

molerat

That looks spot on. The whole amount has been paid and taxed with some at 40%. The bonus payment which you have already received has been deducted from your net pay as an advance leaving you with a normal month's pay. You will get £77.20 overpaid tax back next month.