Tax on bonus?

[peige]

Its unlikely with modern software that its taxed incorrectly, what you are seeing is that the software is allowing for you earn more now so its taxed with the formula that this is going to happen every month but when it doesn't it will tax you less and return some of what it took from this month. Its all worked out on making the sums right at the end of the year, if there is a lump payment or a low week for some reason it deducts or under deducts to compensate but it all washes out over the next payroll periods.

Narks me off at work when people give me grief about deductions, literally all we do is put in the tax code and how many hours worked and everything else is out of our hands. As long as you run updated payroll software (sage for me) there is nothing that can be done and how much or how little is taxed, its entirely out of the person running payrolls control.

 

[Efour]

I'm guessing you're already on your way to a Gucci belt store?
You must be a top revenue earner.

 

[COYS]

I'm guessing you're already on your way to a Gucci belt store?
You must be a top revenue earner.

I'm shocked that took 22 posts to be said!

 

[willhub]

top revenue earner ? How.

The bonus is paying for the RTX 3080 and partially the OLED lol

I've overspent this year, thanks lockdown, and shiny things.

 

[glenimp617]

I always cry when my bonus comes in. Damn taxman!

 

[Hades]

What will probably happen is that any overpaid tax will increase your tax code for next year. So you'll gradually get it back over 2021. Aint tax great

 

[dowie]

I'm not touching the 40% threshold though on a 22.5k a year job?

It's been done as though that is your typical monthly pay... they'll have to correct for it in following month(s).

edit - unless this is student loan repayments too.

 

[m@rty]

Bonus?!?!? What is that

 

[moon man]

I always find logging on to my personal tax account (Employee) at hmrc is quite handy, gives a week by week record and you can alter predicted earnings this tax year if way off the mark and. fast track rebates ect

 

[A2Z]

Sounds about right. I did £1.6k worth of overtime this month (actually 4 weeks), only getting about £900 extra pay. It did push me to 40% bracket though. Sigh.

 

[cheesyboy]

You kept (net) 59% of the gross

That means tax of 41%

That's made up of:
20% Income Tax
12% NI
9% Student Loan

So spot on.

 

[Raikiri]

I used Listen to the tax man , I just added my bonus on top of my wage before tax.

And I'm no where near 40% bracket.

My pre-tax is 1999.02
My take home wage is 1620.
Bonus 1350 (before tax)

1250L tax code.


461.33 tax, ni 306.89 and student loan 155

22.5k a year is my salary

Sounds about right if you were earning £3350 every month, so it looks like they've taxed you as if that's your normal income. It'll be adjusted on your following payments or you'll get a rebate in the new tax year.

 

[cheesyboy]

Sounds about right if you were earning £3350 every month, so it looks like they've taxed you as if that's your normal income. It'll be adjusted on your following payments or you'll get a rebate in the new tax year.

Nope, no rebate or adjustment - he didn't cross any rate change limits (like going into higher tax rate), so it's all as it should be.

 

[Raikiri]

Nope, no rebate or adjustment - he didn't cross any rate change limits (like going into higher tax rate), so it's all as it should be.

You haven't accounted for allowances in your math.

9% student loan is only on earnings over £1,615 per month. So on £3,350 it would be £156.15 or 4.7%.

Also income tax isn't 20%, it's 20% on earnings between £12,500 and £50,000. So on £3,350 per month only £2308 of that is taxed at 20%, for an effective income tax of about 13.8%.

He has overpaid for the month.

 

[dowie]

Nope, no rebate or adjustment - he didn't cross any rate change limits (like going into higher tax rate), so it's all as it should be.

It's clearly not as it should be... even at a glance.

 

[Semple]

I never got any rebate in April this year? And last year my wage was jumping from 1580 to 1900-2100 every 3 months in line with the bonuses.

Can HMRC do a checkup if I prompt them to now?

You can verify yourself if you look at your P60.

That'll give you a full breakdown from the previous year of your overall earnings (so all bonuses added in), and a breakdown of tax/ni/SL etc paid.

Obviously for this year you'll need to wait.

 

[Semple]

You haven't accounted for allowances in your math.

9% student loan is only on earnings over £1,615 per month. So on £3,350 it would be £156.15 or 4.7%.

Also income tax isn't 20%, it's 20% on earnings between £12,500 and £50,000. So on £3,350 per month only £2308 of that is taxed at 20%, for an effective income tax of about 13.8%.

He has overpaid for the month.

That's normally always the case whenever bonuses are given. I don't think i've ever paid the "correct" amount due whenever i get a bonus, it's always skewed and balances out the following month.

 

[cheesyboy]

You haven't accounted for allowances in your math.

9% student loan is only on earnings over £1,615 per month. So on £3,350 it would be £156.15 or 4.7%.

Also income tax isn't 20%, it's 20% on earnings between £12,500 and £50,000. So on £3,350 per month only £2308 of that is taxed at 20%, for an effective income tax of about 13.8%.

He has overpaid for the month.

No. He took home an extra £800 on a bonus of £1350.

ALL of that £1350 is in the 20% bracket and ALL of it is in the 12% NI bracket and ALL of it is in the 9% Student Loan bracket.

So, as per my earlier post:

You kept (net) 59% of the gross

That means tax of 41%

That's made up of:
20% Income Tax
12% NI
9% Student Loan

So spot on.

His regular earnings are in the middle of the 20%/12%/9% bracket, so no problem with him dipping in and out of those rates, so no adjustments are needed.

 

[cheesyboy]

It's clearly not as it should be... even at a glance.

It's counter-intuitive, but that doesn't mean it's wrong

 

[Kenai]

You haven't accounted for allowances in your math.

9% student loan is only on earnings over £1,615 per month. So on £3,350 it would be £156.15 or 4.7%.

Also income tax isn't 20%, it's 20% on earnings between £12,500 and £50,000. So on £3,350 per month only £2308 of that is taxed at 20%, for an effective income tax of about 13.8%.

He has overpaid for the month.

If you're only looking at the bonus amount, you don't need to account for the allowances, as it'll all fall into the taxable brackets:

20% of £1350 = £270 tax
12% of £1350 = £162 NI
9% of £1350 = £121.50 SL repayment

Total of £553.50 deducted from the £1350 bonus amount, is what i'd expect to see. No adjustment the following month as nothing has entered any alternative taxation rates etc.