Going above tax threshold

sarmia

Hi,

If you are currently in the 20% tax bracket and have a one off bonus payment which takes you into the 40%/50% tax bracket, do you pay the higher rate tax for that month or do you continue to pay the higher tax rate for the rest of that tax year even though salary payment has gone back down to normal?

Hope this makes sense.

badmemory

Tax works on your year to date income. So as long as your tax code does not have an X or non cumulative after it then by the end of the tax year you will have paid the correct tax. That is you will gradually get back the overpaid tax over the year.

Dazed_and_confused

And you'll be pleased to know that the 50% tax rate no longer exists.

It's 40% and 45% for most people

41% and 46% for people Scottish resident for tax purposes