We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
The Forum is currently experiencing technical issues which the team are working to resolve. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The correction to tax will start the month after the bonus is paid. Some of the higher rate tax will be converted to 20% tax each month. Very rough figures the correction will complete around Oct/Nov. You will see what appears to be an increase in your tax as you run out of 40% tax being converted to 20% tax, usually this happens over two months.
Thanks for the replies all. So it appears that once PAYE realises I have overpaid, my tax for the rest of the year will be reduced to gradually repay me. I do not think my monthly tax will be enough to repay the full overpayment, I assume any balance will be dealt with as a rebate at the end of the tax year?
Seems like a more sensible position would be for a full rebate to be made as soon as they realise there has been an overpayment and then I continue to pay tax for the rest of the year. As it stands I will be missing months' of interest on that bonus as HMRC will have around £5k of tax to repay!
I don't think it will that much.
If your salary is £30k and the payment is £13k, the threshold is £37,700 - so that is £5300 taxed at 40% rather than 20%. so a tax bill of £1,060 to repay - assuming you don't have any other income to take into account...
The £37700 is the size of the 20% tax band you need to also add on the tax allowance usually £12570 (In practise about £9 higher for PAYE)
