Pay/Tax Question

['Press Start']

Say you were paid around ?25k a year but due to an annual bonus you got more then ?2666 in a month. Do you have to pay 40% on any extra over ?2666?

I thought the 40% tax only came in after you earn more then ?34.4k (FY13)?

Thanks in advanced.

[Brad]

Limit is per year I'm 99% sure

[EvilBoris]

I would of thought so, you are allocated your tax code which is issued once a year (?) I think.

[Colin]

Higher rate tax only kicks in when you break your threshold. It wouldn't matter if you earned it all in one week then never made a penny for the rest of the year, so don't worry about earning extra in one month.

['Press Start']

Higher rate tax only kicks in when you break your threshold. It wouldn't matter if you earned it all in one week then never made a penny for the rest of the year, so don't worry about earning extra in one month.

Cheers. (and thanks for the above responses too) I have been paid less then expected and HR are telling me it is because I earned more then ?2666 in 1 month, therefore the 40% kicked in. I did not think that was correct. I have not earned anywhere near ?34k so it must be a pay mistake.

[Colin]

I'm director of my own company and haven't been a PAYE employee in a long time, but I can't see how they can work that one out. They would only then have to readjust your tax the following month then. Thank god my accountant deals with all that crap!

['Press Start']

They would only then have to readjust your tax the following month then. Thank god my accountant deals with all that crap!

Seems you are correct sir.

I have just been told tax payments in May will be a lower amount. Phew!

Cheers

[Plough Boy]

Seems you are correct sir.

I have just been told tax payments in May will be a lower amount. Phew!

Cheers

This is more common than it ought to be.
Your pay in April is your first for the financial tax year and because of this the majority of payroll packages assume that your monthly gross will be reflective of your pay throughout the year even if you classify the bonus split from the normal. Hence you getting slammed on tax.
Most payroll staff can get round this but it isn't unusual. As you say you will pay barely any PAYE and NI E'ees comparatively in May.
I used to love auditing payroll. Some people used to pull mega scams.

['Press Start']

This is more common than it ought to be.
Your pay in April is your first for the financial tax year and because of this the majority of payroll packages assume that your monthly gross will be reflective of your pay throughout the year even if you classify the bonus split from the normal. Hence you getting slammed on tax.
Most payroll staff can get round this but it isn't unusual. As you say you will pay barely any PAYE and NI E'ees comparatively in May.
I used to love auditing payroll. Some people used to pull mega scams.

This makes absolute sense. I wish HR would have explained like this to me. Thank you.

[Mayhem]

^ this. I did on call work while at HP of variable numbers of weeks per month, so my monthly salary was always changing from one month to another. The tax rate applied is based upon the thresholds divided by 12 as noted. By March, HR knew what I'd earned in the tax year, and March's pay reflected any extra tax or pay I should receive accounting for all the tax levied over the previous 11 months.