If I get a bonus first pay day in April....

JackeeBoy

Would my tax bracket be automatically bumped up? I earn less than £50,000 a year but was paid a bonus in April which took my total gross salary to £6,500 for the month. I paid around £500 more in tax than expected and my tax code is also correct being 1250L. This is the only reason for the extra tax I can think of (tax was £1,500 and should have been closer to £1,000).

If the above is correct, when will I get the extra tax paid back? I budgeted and put a deposit down for something I need that cash for.

comeandgo

You will get some of it next pay and a bit more the following pay and a wee bit more the following pay until the end of the tax year when you will have received it all back.

chrisbur

You have not said what the split is between normal earnings and bonus so impossible to say when your tax will be repaid by.
Your allowance before tax is due at 40% increases by about 4166 a month so you get 8332 in the second month and so on. take your 6500 for month 1 and add your normal earnings for each month to that when your earnings are under the figure for paying 40% tax that is the month you will have had back all the 40% tax you paid.

JackeeBoy

chrisbur wrote: »

You have not said what the split is between normal earnings and bonus so impossible to say when your tax will be repaid by.
Your allowance before tax is due at 40% increases by about 4166 a month so you get 8332 in the second month and so on. take your 6500 for month 1 and add your normal earnings for each month to that when your earnings are under the figure for paying 40% tax that is the month you will have had back all the 40% tax you paid.

£3750 normal
£2750 bonus

chrisbur

JackeeBoy wrote: »

£3750 normal
£2750 bonus

On these figures by the time you reach month 7 your earnings will be 2900 and you can earn 29166 before 40% tax is due so month 7 will see the last reduction in tax to repay the 40% tax you paid in month 1. Each month should see a tax figure of about £83 aprox reduction as the 40% tax is gradually repaid.
Month 8 will then only have tax deducted at 20% so you will then see an increase in your tax figure; as you are no longer getting any 40% tax converted to 20% tax.

JackeeBoy

Thanks all. Chris, does that mean there is no way I can get it back in a lump-sum? Not being greedy, it's just I put down a deposit for something and now it's looking like I have to take out credit to pay of the last bit!

chrisbur

JackeeBoy wrote: »

Thanks all. Chris, does that mean there is no way I can get it back in a lump-sum? Not being greedy, it's just I put down a deposit for something and now it's looking like I have to take out credit to pay of the last bit!

Sorry none that I know off.

KevinG

There's no way I know of that you can get it back because you have not overpaid tax, you have paid exactly what is due under PAYE.

Dazed_and_confused

KevinG has nailed it. You haven't paid too much tax so no refund is due.

The fact is you earned £6,500 in the first month of the tax year. That is an annual equivalent of £78,000.

So some 40% tax is due.

If you earn £3,750 in May (month 2 of the tax year) then your annualised income will be £ 61,500 and your tax will be calculated based on this. And so on.

The only time you would have a problem is if your tax code is changed to a non cumulative basis.

JackeeBoy

You all are so smart. No only have you answered my question, you've saved me trying to get in touch with HMRC which is a bloody pain to say the least.

chrisbur

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