New tax code for updated income

Dan_Marino

Hi,

I have recently received a small pay increase of £2,000, going from £111,000 to £113,000 and have updated my estimated income accordingly on the HMRC site. I have also received a bonus of £42,500 so should I be including that amount as well?

For the current tax year, I would have had 6 months at £111k and 6 month on £113k so should my estimated income be the average of that (£112k) plus the bonus amount - £154,500?

My bonus will obviously be taxed as per normal in my next pay check but I'm just concerned that HMRC will think my salary is now £154,500 and I'll lose all of my personal allowance for good, when I should retain £6,070 from April given I lose £6,500 as I'm £13,000 over the £100,000 threshold.

molerat

It is your income for the whole year that counts so £55.5K + £56.5K + £42.5K = £154.5K.  Have pension payments been deducted from those amounts ?

Dazed_and_C0nfused

Dan_Marino said:

Hi,

I have recently received a small pay increase of £2,000, going from £111,000 to £113,000 and have updated my estimated income accordingly on the HMRC site. I have also received a bonus of £42,500 so should I be including that amount as well?

For the current tax year, I would have had 6 months at £111k and 6 month on £113k so should my estimated income be the average of that (£112k) plus the bonus amount - £154,500?

My bonus will obviously be taxed as per normal in my next pay check but I'm just concerned that HMRC will think my salary is now £154,500 and I'll lose all of my personal allowance for good, when I should retain £6,070 from April given I lose £6,500 as I'm £13,000 over the £100,000 threshold.

Your salary is of little or no relevance when it comes to tax.

It's your taxable earnings (and any other taxable income) which are important and the bonus will be part of your taxable income for 2024-25.

So unless you make significant pension or Gift Aid contributions your adjusted net income will be at least £125,140 and you will lose all your Personal Allowance.

eskbanker

Dan_Marino said:

I'm just concerned that HMRC will think my salary is now £154,500 and I'll lose all of my personal allowance for good

Surely you'd have a PA for any tax year in which your taxable income is below £125,140?