Help, how much will a £1200 bonus be taxed?

[keepingmypeaches]

I can find nothing on Google to help me find this out myself

DH is getting a £1200 Christmas bonus. Does anyone know how much this will be taxed?

From what I can gather, bonuses are taxed heavily compared to normal earnings.

Thank you

It depends how much he will earn in total for the month. There’s no specific rate for bonuses. If you’re happy to say how much basic pay he’ll get for the month, then I can work out how much net pay he’ll get overall.

Trying to think what happened to me in similar circumstances - I think the first month I was taxed as though my salary had increased by that amount monthly then for about three months the overpaid tax was refunded via paying less tax than normal on my base salary. That was for PAYE. He'll definitely be better off for the month but it might take a few months to see the whole amount iyswim.

It depends on his salary as I think he will pay his normal tax rate on it, however if it takes his earnings into a higher tax band the higher rate will apply to the portion that is within that band.

No, bonuses aren’t taxed more heavily than normal pay. What is his normal tax rate?

Miranda Thank you! He earns £27000 a year usually, however, along with the letter to say he's got a bonus, he was told his salary is going up to £27,758

You can use a salary calculator like listentotaxman.com/m/ and make sure you enter the total monthly amount including the bonus.

Yes, bonuses are taxed no differently, it just usually seems like more as receiving the bonus may take you into higher brackets/use up allowances or affect other payments such as student loan etc.

My DH had a £1150 bonus this month and took home roughly £900 more than usual so it’ll probably be around that.

Sweetie But does he earn a similar salary to £27,000?

All his personal allowance is used up so roughly 20% tax, 10% national insurance, 10% student loan (If relevant), %X pension (whatever he usually pays). I usually find you keep around 55% as a rule of thumb.

Use salary calculator.com there's a section for bonus

For the month his bonus is paid, he will be taxed as if his monthly salary is (£27758/12) + £1200, so it may appear that it is taxed more heavily as a bigger proportion is above the personal allowance, but it will all work out by the end of the tax year, as he will probably pay a little less tax at the end of January, February and March to make up for being overtaxed this month.

So if his normal wage is £1800 pm, he might get £2500 this month and then £1850 a month for the rest of the tax year (made up numbers btw, you need to use an online calculator to get accurate ones).

part of this will depend on the payroll software used by the employer so it can vary.

I had a bonus one year which was taxed more than I expected because the payroll software divided up the tax allowances into 12 months of the year which meant that although my normal pay was firmly within the 20% income tax band, the month I had my bonus the software treated me as if my salary would be like that every month and took off a chunk in the 40% tax band. However, then each subsequent month till the end of the tax year the software did then register that I wasn't getting the higher salary each month and adjusted the tax deducted down so by the end of the tax year it was all correct.

in other employments the software has been capable of accepting that a payment is a one-off and doesn't swipe anything at the 40% rate.

as pp say there is nothing different in the tax regime for bonuses specifically. they are just income and are subject to all the normal deductions from income.

This site is pretty accurate. You just full in all the sections and it gives you a take home amount for weekly, monthly
, daily, etc. I'm on a similar salary and lose about a third of any bonus to tax and student loan. If he doesn't have a student loan, he'll keep a bit more. www.thesalarycalculator.co.uk/salary.php

I earn 27k and got 1600 bonus. I ended up with about 900

No, he earns a little bit more than that (it varies with overtime) but as a rule with bonuses I always calculate 25%-30% of deductions and it is always within that range. Always better to overestimate the deductions and you shouldn’t be disappointed.

Also it depends what his pension contributions are so add that on too.

With a base salary of £27,758, his taxable salary after personal (assuming he gets full rate) will be £16,258. Monthly taxable salary will be 1/12 of that, so £1,355.

With the bonus of £1,200 that becomes £2,555, which if you multiply by 12 is still under the basic rate band.

So he’ll get taxed on the £1,200 by 20% PAYE (£240), NICs (which forgive me but I won’t be sitting down and calculating right now!), and any student loan (which at that rate will be about £70 if he’s on repayment plan 1, unsure about plan 2). Less of course any pension contributions. I think he’ll probably see £800 - £900 of it depending on circumstances.

I used to take home more than that on a 23k salary lockhart. Looks like you've applied a 40% tax rate!!!

Thanks all, would be great if he could see £800+ of it!

He has no student loan.

@pinkandstripey the £16k odd is what is taxable after the standard tax free personal allowance of £11,500. It’s not take home pay. Take home pay would be £11,500 + ~ 80% of £16k, less any extras like pensions and student loan repayments.

£240 is 20% of £1,200, so that’s the minimum that would be deducted. NICs / pensions / student loan after that would mean more is a taken off, so I’m estimating £800 - £900 depending on circumstances.