Wages, bonus and tax

Barejester

Good morning Forumers, I'm looking for a bit of help on calculating tax on a bonus payment I have recently received, particularly as I think it is high. My standard salary is £25,500 and each quarter I can earn a bonus between £1000 and £1500. For the first quarter, paid in May, my bonus was £1250 - after tax, national insurance and an increased student loan payment I received what I calculate to be £748.40 (last months take home versus this months take home). This is a deduction of around 29% versus a usual deduction of 21%.


I tried to Google but didn't come up with anything clear, so does anyone here have a guide to bonuses and tax?


My tax code is 1150L

chrisbur

Barejester wrote: »

Good morning Forumers, I'm looking for a bit of help on calculating tax on a bonus payment I have recently received, particularly as I think it is high. My standard salary is £25,500 and each quarter I can earn a bonus between £1000 and £1500. For the first quarter, paid in May, my bonus was £1250 - after tax, national insurance and an increased student loan payment I received what I calculate to be £748.40 (last months take home versus this months take home). This is a deduction of around 29% versus a usual deduction of 21%.


I tried to Google but didn't come up with anything clear, so does anyone here have a guide to bonuses and tax?


My tax code is 1150L

It is no good working out the percentage of deductions and comparing with different gross pays. All of these deductions have a band of earnings on which you pay 0% and tnen once you go over the 0% limit you start paying eg 20% tax 12% NI usually 9% student loan. If your normal earnings are taking you over the 0% band then any increase will all fall in the band of full deduction. That means that as your earnings increase the percentage that they represent of your gross pay will increase.

Having said that the figures you quote on a quick calc. seem just a touch high, to check properly can you give taxable gross, tax paid, NI paid, date of payment, taxable pay to date, tax paid to date, and any other deductions, from last two payslips.

Barejester

Hi, thanks for the clarification - I was clearly simplifying it too much. As a break down of the last two months see below - does this give you the figures you requested?


May 2017
Salary - £2133.33
Bonus - £1270.00
Pension Salary Sacrifice - £53.33
NIC - £320.40
Tax - £478.20
Student Loan - £168.00
Total Gross - £3350.00
Total Deductions - £966.60


April 2017
Salary - £2133.33
Pension Salary Sacrifice - £53.33
NIC - £168.00
Tax - £224.00
Student Loan - £53
Total Gross - £2080.00
Total Deductions - £445.00

agrinnall

Sounds about right to me. The deductions on an additional £1250 would be:

Tax @20% = £250
Student loan @9% = £112.50
NI @ 12% = £150

Take those off of £1250 and you get a net figure of £737.50. You may have actually been paid a little more as you may have only paid the 2% NI rate on a part of the amount.

chrisbur

Barejester wrote: »

Hi, thanks for the clarification - I was clearly simplifying it too much. As a break down of the last two months see below - does this give you the figures you requested?


May 2017
Salary - £2133.33
Bonus - £1270.00
Pension Salary Sacrifice - £53.33
NIC - £320.40
Tax - £478.20
Student Loan - £168.00
Total Gross - £3350.00
Total Deductions - £966.60


April 2017
Salary - £2133.33
Pension Salary Sacrifice - £53.33
NIC - £168.00
Tax - £224.00
Student Loan - £53
Total Gross - £2080.00
Total Deductions - £445.00

Bonus was originally quoted as £1250 and earnings as 25500 but last post has bonus of 1270 and earnings of 25600. If you take the tax NI and SL from April total 445 and deduct from May total 966.6 you get 521.60 as deductions increase. I would expect an increase in deductions of 41% on 1270 which is 520.70. Your deductions went up by 521.60 so not far adrift.
There may be a few pence accounted for in roundings but it appears the figures for April are just a shade low. We are talking here only about 50 to 60 pence so I do not think it is worth looking any further into it. Near as dammit the net payment you received from your bonus is correct.

chrisbur

agrinnall wrote: »

Sounds about right to me. The deductions on an additional £1250 would be:

Tax @20% = £250
Student loan @9% = £112.50
NI @ 12% = £150

Take those off of £1250 and you get a net figure of £737.50. You may have actually been paid a little more as you may have only paid the 2% NI rate on a part of the amount.

12% NI would be due on the full amount, most of the difference comes from the bonus now showing as £1270 not £1250

agrinnall

chrisbur wrote: »

12% NI would be due on the full amount, most of the difference comes from the bonus now showing as £1270 not £1250

Thanks, I didn't look at the revised bonus figure and I couldn't be bothered to look up the point at which NI falls from 12% to 2%, I thought the OP could do that .