Bonus - Which Tax Year?

Justin1986

Hello all, I'm hoping for some advice and will try and keep it short and straight to the point. 

Current salary - £107k although I salary sacrifice enough into my pension over and above my regular pension contributions to take me below the £100k mark
2020 bonus paid in month 1 of 2021 was £10k.  Total predicted taxable earnings for this year is looking like £130k after overtime (HMRC predicted income already reflects this).  So I've already lost my tax free amount.

I'm hopeful we will get a bonus soon, and we normally get the option to take it either 1st April, or in the 1st pay month of the tax year (for 2022).

As I have already breached the £125k mark, should I take it in this tax year and hope to keep my tax code allowance for 2022? This way I can try and keep my earnings lower to keep my tax free allowance next tax year?   It's probably a daft question.  

Thanks in advance for any advice

[Deleted User]

I think you probably know the answer - this tax year would be best if there is a possibility that you can preserve your personal allowance next tax year. I think that I would insist on 31st March rather than 1st April - just to make sure it is taxable in Month 12.

Justin1986

[Deleted User] said:

I think you probably know the answer - this tax year would be best if there is a possibility that you can preserve your personal allowance next tax year. I think that I would insist on 31st March rather than 1st April - just to make sure it is taxable in Month 12.

Thanks for clarifying.  Thats exactly my thoughts   

I'm assuming I'd need to update my estimated end of year income to reflect, as soon as I know it'll be paid ?

[Deleted User]

If it is paid this month it would clearly be too late for this year but I would imagine that HMRC may assume a similar income for next year and issue coding instructions accordingly. So, keep an eye on that.