Tax question on bonus?

[stnikkilarse1978]

If someone is paid £40k a year and is paid a bonus of £10k how much tax will they pay on the £10k?

I forget what the limit is for basic rate tax per month, but you will be paying 40% on most of the bonus so a bit less than £4k.

Will find a website and check

Why is my post all in bold type??

I am seeing everything in bold type I thought it was my eyes!

I thought it would be £3712 but it was £4068. Is that right?

This is my DHs world. Roughly with tax and NI he losses half any bonus. However, his weekly salary is then a little higher as the over payment in tax comes back and a little later in the year he passes the NI threshold and no longer pays that. So I would reckon on taking home £5000 on the day a recoping extra over the next few months.

Your DH pays -

• no tax on the first £6475 of his salary
• tax at 20% on the next £37,400 (so earning up to £43,875)

• anything over £43,875 is taxed at 40%

So on the £10k bonus he should pay 20% on the first 3,875 and then 40% on the rest -

0.3 X 3875 = 1162.5
0.4 x 6125 = 2450

Total = £3612.5

He'll also pay, I think, 11% NI contributions on around 3.9k -another £427 -so total of about £4040. So if your number includes NI, it looks right.

This is a scary thread. The bold looks shouty and cross.

Accountancy. It is serious shit....

When I tried putting it into a tax calculating website the problem was that it annualised the amount so it would be over £150k per year which I think doesn't have personal allowance (my tax knowledge isn't quite current). So you would probably end up paying more tax and ni in this month than you would expect, but will get some back in later months.

It doesn't quite work like that, and it depends on 1) his tax code, 2) how much he has been paid (and how much tax deducted) in previous months 3) what month the payment is made in and 4) whether the bonus is paid separately or with the rest of the pay and if separately, whether before or after the normal pay for the month.

Also, I think you are including NI in the figure of £4,068 which is calculated on a different basis and again may vary if the bonus is paid separately from the main pay (and will be different if he is in a contracted out pension scheme etc.).

Although what Noah says isn't quite right, it is true that tax for the rest of the year will probably be lower than normal (by about £578 a month). This is because we are in month 9 at the moment so only 9/12 of £34,700 is taxed at 20%. If this doesn't happen, he is probably being paid on a 'Month 1' basis and will end up paying too much tax - if he doesn't do a tax return, write to HMRC once you have the March payslip and send them a copy.

Oh and the bold is because MN have broken the code on this page - needs alerting in Site Stuff.

Hi I'm sorry but if dh pays 40% tax then his whole bonus will be taxed at 40%, and 11% NI too. So he should receive £4900 as a cash sum.

Please bear in mind the student loan company if relevant and whether any of it is likely to end up in is pension. Could be another 20%.

Expect the worst and enjoy it. Get something nice. Sorry you didn't ask how to spend it did you? Well if you want any ideas let me know.

Oops, not sure what went wrong there, the decrease in tax in future months is £69 not £578!

Sorry but this bold type is awful.

And I'm very afraid that I am right. Please be happy with what you actually get. Dh and I have always said a bonus is a bonus. Take it for what it is. Hopefully a really nice holiday for you all, but again if you need any help spending it, I'm your lady.

No, you are not right pombear. For a start, NI is only charged at 11% on earnings between £476 and £3,656 in a month, earnings above this Upper Earnings Limit are charged at 1%.

So if you earn £40,000/12 + £10,000 in a month, there is £446.57 of NI to pay (as opposed to £314.30 if you earn £40,000/12)

Note that if the person is a director of the company different rules apply, but I am assuming this is not the case.

I wouldn't turn my nose up at wny bonus taxed or not - Some people can't even dream of that sort of cash. I only earn 10 K per annum for part time work and am getting a nice xmas hamper as my bonuse this year