Tax change mid year

[Darbs76]

Hi all

I’ve been doing a lot of overtime in the last few months, first time I’ve done overtime and I'm used to having the same salary every month apart from any pay rises etc. I’ve realised this month I’ll go into the higher tax bracket so will be paying 40% tax on my overtime. Will my tax code be automatically adjusted (or does it depend on employer?) or will I end up with a tax bill at the end of the tax year? I’ve reduced my overtime now as not killing myself to lose almost half of it!

Many thanks

Your tax code doesn’t get adjusted if you go into the 40% bracket. You should get it deducted in your pay as normal, and might get some of it back later I’m the year if it works out that you have paid too much.

Two things in life are certain. Death and taxes.

However under pay as you earn your tax will be dealt with on a month by month cumulative basis so you shouldn't get a bill at the year end.

Don't forget lower rate tax payers pay 32% including NI and higher rate 42% on the appropriate section of income so the jump is not quite as great as you say

You will pay tax as if the higher salary will continue for the rest of the year. If your total earnings drop back to remain under the 40% tax bracket for the rest of the year, you should automatically get a tax rebate in your paypacket.

@topcat2014

Two things in life are certain. Death and taxes.

However under pay as you earn your tax will be dealt with on a month by month cumulative basis so you shouldn't get a bill at the year end.

Don't forget lower rate tax payers pay 32% including NI and higher rate 42% on the appropriate section of income so the jump is not quite as great as you say

What do you mean, does NI drop if you earn over 50k?

You will pay tax as if the higher salary will continue for the rest of the year. If your total earnings drop back to remain under the 40% tax bracket for the rest of the year, you should automatically get a tax rebate in your paypacket.

^
This. Yes you will pay more tax on this month but it will work itself out.

@PressingTeams yes, NI is not a flat rate. Very roughly, the first £800 a month you dont pay NI on. Between 800 and 4100 you pay 12%, and above that, you pay 2%.

Thanks all. It’s likely I’ll do some more overtime but not at the same rate as I have been (not killing myself in overtime to be taxed 40% on it (not to mention extra pension etc). I guess it will all work out in the end. Payslips should be out tomorrow so guess I’ll find out how much the tax man has taken!

@topcat2014 - that’s interesting re the NI - let’s hope I have less taken by the tax man than I’m expecting then! I find out tomorrow

Well I haven’t seen my payslip but can see pending payments on my bank app and I got £100 more than I expected - so the tax man took £400 extra tax and I was expecting it to be £500. Some of that will be extra pension and NI too though. Jeez, glad I’ve reduced my overtime now as not busting a gut making myself sick for so much to go to the tax man.

Thanks for the advice all.