Company bonus tax

glastowinebar

A person earning £35000 a year is to get a company bonus of 5% of gross annual pay 
Can someone please say how the tax is deducted from this bonus? Ie is it the usual income tax and NI taken off? 

Sandtree

Its just normal income so go to an online calculator and see the difference between £35,000 and £36,750

Dazed_and_C0nfused

Yes.  And student loan if applicable.

If the bonus is paid very early in the tax year i.e. month to 5 May then some 40% tax would be deducted but this would effectively be refunded when earnings return to sub £50,270k/year.

glastowinebar

Thanks, it’s a Christmas bonus 

Dazed_and_C0nfused

Then only 20% tax will deducted.

[Deleted User]

And approx £477 of the £1750 bonus would attract NIC at 2% rate as opposed to 12%.

glastowinebar

Thanks all 👍

On-the-coast

[Deleted User] said:

And approx £477 of the £1750 bonus would attract NIC at 2% rate as opposed to 12%.

I'm prettty sure the whole of that bonus will be subject to 12% NI + 20% income tax...  the reference to 50k above was only as a "for instance". The OP said 5% of £35k...  so you'd be left with £1190 after taxes (unless there are student loans to repay as well). 

Dazed_and_C0nfused

On-the-coast said:

[Deleted User] said:

And approx £477 of the £1750 bonus would attract NIC at 2% rate as opposed to 12%.

I'm prettty sure the whole of that bonus will be subject to 12% NI + 20% income tax...  the reference to 50k above was only as a "for instance". The OP said 5% of £35k...  so you'd be left with £1190 after taxes (unless there are student loans to repay as well). 

I think you're forgetting that NI is non cumulative and the whole of the bonus is going to be paid on one payday.

So £4,666 in one month, which is well above the upper limit.  £477 above in fact 

Jeremy535897

Assuming the employee is not a director.