Receiving a bonus in pay packet on PayE (Into Super Tax Bracket) can i claim back tax?

ScottyB210

Hello everyone im currently serving with the armed for forces and i am receiving a commitment bonus in 2 weeks (sept 2018) of 15k which will be around 10,200 after the tax i now earn 30k per annual before tax so this with orher bonus’s for being away from the Uk all the time will send me well over the 45k mark and send me into the 40% tax bracket i believe .Im wondering if i can cliam tax back for the almost 5k lost in tax as it’s half way through the year i doubt it will be able to sort it’s self out enough to not charge me enough tax for the next couple of months to make up the 5k i lost on it will it? I rent out my home so i do my own tax returns so can it be added on there somewhere for the 17/18 tax returns? Also i am going overseas over this bonus money (15k) time and i will be receiving a couple of hundered extra for being away plus my pay is going up by 2.9% as we haven’t received it since April we will be getting 6months back pay of it in the same pay packet so im wondering if i will get charged 40% tax on that also . Is it better to wait until im getting a normal pay packet to cliam for this bonus (15k) so i don’t get charged 40% on everything else in September packet ? Any information will be greatly appreciated i know this seems like im on mega money but i can assure you im not im getting a big bonus going away for the month and getting a payback of a pay increase all in one month so im going well over 45k for the year now out of no where and ill have to be in the Army for another 15+ years to ever earn 45k a year normally Thanks for your time

[Deleted User]

Given that you are in the armed forces, you are probably in a pension scheme. So, even with the bonus, pay increase and few hundred extra you will be unlikely to be a 40% taxpayer when the tax year is complete. Even if you do cross that band it would appear that only a small amount will attract 40%.

Accordingly you will gradually recoup the tax paid at 40% as your salary avegages out over the rest of the year.

agrinnall

Super Tax was scrapped in 1973. From the figures you give you might (but probably won't) have a small amount of income that falls into the Higher Rate band, but you are a very long way from what is the closest thing to Super Tax nowadays, the Additional Rate, which kicks in at £150,000.

BakingC

If the tax has not evened itself out by the end of the year when you do your tax return you would be able to deduct the amount you have overpaid against the tax due on your income from other sources e.g. renting out your house. You should not be left out of pocket in the long term by this although it will take as long as HMRC dragging their heels to sort it.

[Deleted User]

BakingC wrote: »

If the tax has not evened itself out by the end of the year when you do your tax return you would be able to deduct the amount you have overpaid against the tax due on your income from other sources e.g. renting out your house. You should not be left out of pocket in the long term by this although it will take as long as HMRC dragging their heels to sort it.

But it will even itself out over the year so long as the op remains employed throughout the rest of the tax year.

The last thing one needs is to be obliged to complete a self-assessment unnecessarily.

sheramber

You cannot take the bonus back to 2017/18. It is taxed in the year it is paid.

Any tax overcharged in September will be adjusted through the PAYE system during the following months so by the end of the tax year it will have sorted itself out.

Silvertabby

[Deleted User] wrote:

Given that you are in the armed forces, you are probably in a pension scheme. So, even with the bonus, pay increase and few hundred extra you will be unlikely to be a 40% taxpayer when the tax year is complete. Even if you do cross that band it would appear that only a small amount will attract 40%.

Accordingly you will gradually recoup the tax paid at 40% as your salary avegages out over the rest of the year.

The Armed Forces pension scheme is notionally non-contributory, so no tax relief on pension contributions.

(I say notionally because the Armed Forces salary is reduced to take account of the 'free' pension. In my day it was 9%)

chrisbur

ScottyB210 wrote: »

Is it better to wait until im getting a normal pay packet to cliam for this bonus (15k) so i don’t get charged 40% on everything else in September packet ?

Cannot say what if any your 40% tax liability will be on the details given but whatever it is it will be decided on your total taxable income at the year end. Any re-arrangement of payments will not affect the final figure.

However if you can choose when payments are made it could benefit you regarding national insurance. I am assuming that the rules for NI are the same for armed forces as for others. When your earnings for the month exceed what is called the Upper Earnings Limit your NI reduces from 12% to 2%. This figure is currently £3863 so if your usual earnings are below this and your extra earnings would take you above this (which would seem to be the case) then you would maximise the benefit from this if all your extras could be paid in one go, and not spread over separate months.

ScottyB210

chrisbur wrote: »

Cannot say what if any your 40% tax liability will be on the details given but whatever it is it will be decided on your total taxable income at the year end. Any re-arrangement of payments will not affect the final figure.

However if you can choose when payments are made it could benefit you regarding national insurance. I am assuming that the rules for NI are the same for armed forces as for others. When your earnings for the month exceed what is called the Upper Earnings Limit your NI reduces from 12% to 2%. This figure is currently £3863 so if your usual earnings are below this and your extra earnings would take you above this (which would seem to be the case) then you would maximise the benefit from this if all your extras could be paid in one go, and not spread over separate months.

So what your saying is to take the big bonus in the same month as i am getting other extra money (normal pay but a couple of hundered higher) plus my backpay for the payrise . So all 3 things including my normal wage would be better in one pay check rather than waiting for a low income month to cliam the 15k bonus?

Ah right so what everyone is saying is i won’t get super taxed i will just get highly taxed that month and i will get the 5kish tax back off the 15k over the next few months until April? Will i end up getting the full 15k in the end in then? Thank you for all the replys everyone I appreciate it , no one around here who’s job it is to advise us on this stuff seems to have a clue

ScottyB210

So in Septemeber will i get taxed 40% of that pay packet in total instead of 20% that’s why i end up with 10k which people usally get instead of the instead of 12k (which would be 20% off 15,000)

Silvertabby

ScottyB210 wrote: »

So what your saying is to take the big bonus in the same month as i am getting other extra money (normal pay but a couple of hundered higher) plus my backpay for the payrise . So all 3 things including my normal wage would be better in one pay check rather than waiting for a low income month to cliam the 15k bonus?

Ah right so what everyone is saying is i won’t get super taxed i will just get highly taxed that month and i will get the 5kish tax back off the 15k over the next few months until April? Will i end up getting the full 15k in the end in then? Thank you for all the replys everyone I appreciate it , no one around here who’s job it is to advise us on this stuff seems to have a clue

No, what people are saying is that you won't be 'super taxed' because that only kicks in if you earn over £150K. You will pay some tax on your bonus - possibly as much as 40%, but probably much less. Rather than looking at each month individually, you need to calculate (if you can) how much you will receive in salary, taxable extras and the bonus over the full financial year (April to April) in which the bonus is paid. Whatever happens, HMRC should sort it out at the year end - and you'll be able to check the figures are right once you get your P60 next May(ish).

It's sad that no-one in your PSF/Pay Office seems able to help. I'm a retired Sgt Pers Admin (RAF) (equivalent to a Pay Corp Sgt if you're Army, PO Writer if RN) and these sorts of queries were our bread and butter.