Work bonus - Tax/benefit advice please??

[Taxtaxtax]

Really hoping someone can give me some advice please!

Am currently working part time and earn under the tax threshold (£10k per year approx)

At the end of this year, the company are offering a one-off bonus which I may well be eligible for. (£10k approx) does anyone know how this is going to affect my tax going forward? I make around £800pm at the moment so don’t pay tax, once I receive this will they take the 20% tax off the 10k (so I get £8k) or charge me tax on every paycheck going forward? So I only get around £640 every month? (How long would this last?)

Also I receive a very small amount of universal credit (£100pm to help with childcare) does anyone know how this works? Is it done monthly or will it be cancelled because I got this lump sum?

This is life changing money for me, but I was planning to use it to pay back some people I owe money too so that my situation can hopefully improve going forwards so won’t be enough to live off and am not too sure how it’s going to affect my monthly wage going forward.

Trying to plan and feeling a bit anxious! All seems to good to be true and I don’t want to promise to repay people if I financially wont be able to.

Thanks so much if you can help!

It will depend on when they pay it. If it's paid towards the beginning of tax year, i.e. April/May/June, the way PAYE works is that you'll probably pay a lot of tax on it (some at higher rate) which then gets refunded through your payslips later in the year, back to leave you having paid the basic rate 20%.

If it's paid towards the end of the tax year, i.e. Jan/Feb/Mar, it's more likely to have been taxed about right at 20%.

PAYE is a blunt tool. It's cumulative on a tax year basis and if there's a large addition in an early month, it works on the assumption that you'll be earning more in future months too (that's the effect, not the exact methodology of the calculation). Earning an extra £10k in say April, will make the PAYE system think you're going to be earning £120k for the year, so it will take higher rate tax. Earning an extra £10 in March, after you've only earned £10k for the year, the system thinks you're going to earn £20k for the year and just charge basic rate tax.

So, if anything, you're likely to pay too much tax in the month it's paid which will then be refunded by paying less tax than usual in subsequent months.

(Don't forget it may mess up your claim for tax credits or universal benefit which are completely separate and nothing to do with your tax - you need to explore the effects on those separately).

Thank you so much for your help! So it is likely going to have a knock on effect over future months with tax but this will ‘refresh’ in April?

And it’s better for me to receive this in Say, March to prevent a mess up?

Really appreciate you taking the time to help, thank you.

Just speak to HMRC. If you receive early on then they will probably spread the tax over the year. If towards the end you will get a one off hit. The probably won't carry it forward into the following year as under Real Time Information they know your normal salary