Tax deductions on lump sum

Skint_yet_Again

sorry if I am being thick but I am struggling to work out the tax that would be deducted on a taxable lump sum of £60000 using tax code 1257L/x. Can anyone help please?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6676663/tax-deductions-on-lump-sum

Is it being paid via a monthly payroll?

Or weekly? Or four weekly?

Skint_yet_Again

Sorry it’s monthly payroll for a one-off lump sum

molerat

£25378.20

£1048.26 tax free, the next £3142 at 20%, the next £7287 at 40% and the remainder at 45%

chrisbur

Will this payment be made with another payment or is it the only payment due for that month. As you are on a non-cumulative tax code the tax payment you make on that lump sum will almost certainly not be the tax due on it at the tax year end.

Skint_yet_Again

Thank you @molerat and @chrisbur

It definitely won’t be the correct amount by the end of the year but just wanted to check what will be deducted at source.

Ai is telling me different figures for 40% rate band so I was getting confused (doesn’t take much these days 🤯🤣) I had calculated £87440/12 Ai said:

• 0% (Personal Allowance): The first £1,047.50 is free from tax.
• 20% (Basic Rate): The next £3,141.67 is taxed at 20%, resulting in £628.33 tax.
• 40% (Higher Rate): The next £6,239.17 is taxed at 40%, resulting in £2,495.67 tax.
• 45% (Additional Rate): Everything remaining (£49,571.66) is taxed at 45%, resulting in £22,307.25 tax

Definitely won’t be using Ai again!!

peteuk

https://forums.moneysavingexpert.com/discussion/6676663/tax-deductions-on-lump-sum

Do you have any other taxable or non taxable income.

You will need to calculate your whole income per annum and then apply the following.

Personal Allowance

Up to £12,570

0%

Basic rate	£12,571 to £50,270	20%

Higher rate	£50,271 to £125,140	40%

Additional rate	over £125,140	45%

Bobziz

https://forums.moneysavingexpert.com/discussion/comment/82073694#Comment_82073694

I'm not questioning it as I haven't done the calcs myself, but how do you know molerat is correct ?

Skint_yet_Again

Thanks @peteuk My next calculation will be the actual tax due including a years taxable pay but the personal allowance will need to be reduced. It’s the 40% rate I was struggling with

@Bobziz I calculated the 40% band as £125140 minus the 20% band 37701 = 87440 which I divided by 12. I have already used the same figure as @molerat

Does anyone know this is incorrect?

DRS1

I would not want to second guess @molerat but surely if you have a personal allowance then the basic rate band tops out at £50271 not £37701.

If so then AI seems to be right (never thought I would say that!)

Skint_yet_Again

Surely then the basic rate after tax allowance is £50270 - 12570 =£37,700.00 ??