Omega Owners Forum
Chat Area => General Discussion Area => Topic started by: powerslinky on 09 April 2016, 13:52:21
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Using ficticious figures here just as an example ;D ;D
job is PAYE & annual bonus is payable pro rata to how many months of the year you were in the firms employment, so in my
case , lets say I'm due £4000 . Bonus was for tax year 2015/16 and is payable if you are still an employee on 31st March 2016 . ( Which I was & still am) ;)
The bonus is being paid in this months wages at the end of April ( so in fact in the following years tax year to when it was earned) I was thinking that 28% would be deducted 20% tax + 8% NI as total for year will not go into the £43k 40% tax threshold.
Hope you are still with me on this :P :P but some fellow workers think as it is being paid in the new tax year 40% will be deducted as the tax system will "calculate" that earnings for the coming year, on this average, will exceed the 40% threshold ::) ::)
Anyone got any real knowledge of how this works & how much should I expect to get out of the £4000 gross extra payment
TIA Al :y
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As far as I'm aware the tax is payable for the year in which it was earned,not for when it gets paid.So if you've earned it up to 4th April this year it should fall into 2015/2016 tax year earnings.
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As far as I'm aware the tax is payable for the year in which it was earned,not for when it gets paid.So if you've earned it up to 4th April this year it should fall into 2015/2016 tax year earnings.
Yer good point that Baza . . . although it is being paid along with this coming months wages, maybe it will be added to last years figures & put onto the 2015/16 P60 & therefore , if the 40% threshold has not been exceeded, 28% should be deducted IMO :-\ :-\
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PAYE calculates monthly deductions based on allowances divided by 12. Easy way to be certain on what year earnings it will be paid, look at your last payslip - if your last payslip is month 12 then the next one is this tax year ;)
Assuming that it is this tax year you get paid the bonus in, which I'm pretty sure it will be, then the extra tax you pay in month 1 will be averaged out and repaid over the course of the following 11 months :y :y
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Ask for it as a cheque and bank it offshore. Problem solved :y
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Ask for it as a cheque and bank it offshore. Problem solved :y
yer it will be going offshore if my missus gets her way Al . . . . sunshine holiday no doubt ::) ::)
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Ask for it as a cheque and bank it offshore. Problem solved :y
No point in banking a cheque offshore unless it is going to earn loads of interest because it's already traceable... Get it in cash ;) ;D
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I was thinking that 28% would be deducted 20% tax + 8% NI as total for year will not go into the £43k 40% tax threshold.
Err Nope:
Employees NI is 12% for a basic rate tax payer (20%). So on a £4K bonus you would pay £480 NI, and £800 Tax - leaving £2720 in your pocket. So the total effective tax rate is 32% on the gross amount.
If you are a higher rate tax payer, then NI is 2%, and the effective total tax rate is 42%.
Your real problem is discovering whether the bonus is paid in "Month 1" or "Month 12". If it's "Month 1", then you'll get clobbered for 42% initially, and then the overpayment will get averaged out for the remaining 11 months of the year (so you'll pay less tax for the following 11 months). If it's "Month 12", then the tax taken should be roughly right. "Month 1" of "Month 12" should be apparent from your payslips.
From what you've said, and the fact that other co-workers seem clued up on the situation and what's likely to happen, I suspect it'll be "Month 1" :(