Income tax question

[TreTops]

I have done a lot of overtime this month I was trying to work out how much I will take home next month.

What happens with income tax when you earn a higher amount one month due which if you earned every month would put you in the next tax bracket, but average earnings over the year would be in the lower bracket? Do they eventually pay the tax back as a tax return? Is this automatic or do you need to apply.

Depends on your tax code. A cumulative code allocates 1/12 of your allowance per month, but allows it to add up as well, so at month 9, you'd be allowed 9/12ths and it calculated accordingly so it will even out.

Non cumulative, you still get 1/12th, but can't accumulate it - you have to apply for a refund if you think it's wrong.

A cumulative tax code would calculate your tax free allowance to date and tax you accordingly. The following month the calculation would include another months tax free allowance against your earnings to date and again tax accordingly. As it is cumulative you would pay less the month after so it would average itself out. HMRC have a net pay calculator that may help.

If you continue working for the whole tax year, tax should be corrected by March, even if your pay goes up and down.

The tax tables take your taxable pay to date and pro rata it to calculate how much tax you should have paid to date, so by your final pay slip, assuming correct tax code it should be correct.

www.gov.uk/tax-codes/letters-in-your-tax-code-what-they-mean

Tax code guide

Thanks. That makes sense.