One off payment tax!

Cupofteaonesugar · 2022-09-22T05:46:14+00:00

Hi all, Just a quick question because I'm really unsure. I normally earn £890 per month. I don't get taxed as I don't earn enough. My employer is giving us a one off COLP which I'm choosing to take in the form of vouchers. They've told me because I'm opting to do this I will.get taxed next year so I need to put the money for the tax aside. I don't know how to work out how much to put aside? My payment will be £1000!

Octomore · 22/09/2022 06:48

What tax bracket are you in?

daffodilandtulip · 22/09/2022 06:49

You usual salary is £10,680. Adding a payment of £1000 will still leave you under the threshold for tax, which is £12,570.

Octomore · 22/09/2022 07:00

Ah, I missed your current salary (too early in the morning!). Yes, you won't owe tax.

Original poster

Cupofteaonesugar · 22/09/2022 08:02

So apparently our employees have to pay tax on the sum so it will be deducted from our pay when then put forward the tax forms or something like that?
Just for peace of mind? What would the yax typically be on that amount if my salary was over £1250?

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BarbaraofSeville · 22/09/2022 09:10

Is there an option to take it as salary/bonus? You could earmark it as a 'voucher' for a particular shop if you're looking to spend the money on something in particular.

Seems a shame to give up 20% tax that is not due, simply due to the way you receive the money, although there may be the option to reclaim the tax if you either talk/write to HMRC or do a tax return.

However, if you get the money in one month, NI might be due, whereas it wouldn't be if you got it as a temporary uplift to your salary for a year.

I'd talk to your employer about this, as there could be implications that they haven't thought about when paying this money in any way other than as an increase in salary paid over the year, eg if someone takes it as part of their salary and is receiving UC, they could lose most of the money as they've earned 'too much' in one particular month.

Original poster

Cupofteaonesugar · 22/09/2022 18:37

BarbaraofSeville · 22/09/2022 09:10

Is there an option to take it as salary/bonus? You could earmark it as a 'voucher' for a particular shop if you're looking to spend the money on something in particular.

Seems a shame to give up 20% tax that is not due, simply due to the way you receive the money, although there may be the option to reclaim the tax if you either talk/write to HMRC or do a tax return.

However, if you get the money in one month, NI might be due, whereas it wouldn't be if you got it as a temporary uplift to your salary for a year.

I'd talk to your employer about this, as there could be implications that they haven't thought about when paying this money in any way other than as an increase in salary paid over the year, eg if someone takes it as part of their salary and is receiving UC, they could lose most of the money as they've earned 'too much' in one particular month.

So the option is to have it paid in wage but it will be subject to relevant NI tax and student loan. I'd then need to put the remainder away to top up the UC which would be lower the following month due to my higher wage. I wouldn't benefit with this option.

Other option is to take it in the form of vouchers. So I could get the vouchers for a supermarket and then I would put what I would've spent aside and benefit from it that way. However I then have the tax that would be deducted next year and I don't know how much this would be!

Or I could take it over 6 months but again it wouldn't really benifit me.

It's so annoying this has to be reported. It isn't an warning it's a gesture from our employers but people on my situation struggle to get the same benifit!

OP posts:

Princessglittery · 22/09/2022 22:33

If it’s tax only work on the basis of 20% so £200.

Original poster

Cupofteaonesugar · 23/09/2022 07:54

Princessglittery · 22/09/2022 22:33

If it’s tax only work on the basis of 20% so £200.

Thank you! I'm just going to put that aside and hope for the best!
I think it'll be slightly lower as my annual salary + bonus is below the threshold but better to be prepared!

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Princessglittery · 23/09/2022 09:10

From what you have said, I agree the tax will be lower, but that is the figure to be safe. I would rather you had a pleasant surprise of paying less tax than the opposite.

starpatch · 24/09/2022 04:50

Surely you should still really tell universal credit about the vouchers? It will be a benefit in kind and will show up on your tax record so they will find out about it. I sympathise as I received a lump sum when starting my job, and was on tax credits. Remember you still get to keep a proportion of the money before it affects your universal credit. If this is money you might have to repay it may be better just to refuse it, so you don't end up repaying money you only partially benefitted from.

Original poster

Cupofteaonesugar · 24/09/2022 07:56

Oh for god sake you're joking? Why would I have to report a voucher?!
Why is there no option for me to seemingly benifit from this!
This is a gesture not an warning why would I need to report a voucher?

So if I took the payment monthly am I right in working it out like this -
£879 (my wage) + £166 (monthly benifit) = £1045 wage
1045 - 573 (my UC allowance before deductions) = 472
472 x 0.45 = £212.4
869 (my allowance of up) - 212 = 657.

So basically I don't benefit taking a payment, I don't benefit taking a voucher and I don't benefit taking it monthly.

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womaninatightspot · 24/09/2022 08:03

I was told you have to report vouchers. I do surveys and normally clear £20 a month Amazon vouchers. I’ve saved them up as my temp contract ends and my income will reduce under the taper rate for a month as next job is a month behind. Will put them through then.

womaninatightspot · 24/09/2022 08:14

You will benefit from it but much less than you’d hope. I was thinking about a 2nd job to increase income. I’d of made 100 a week. The maths went like this 100- 20 income tax (no NI as get second allowance for 2nd job) -9% student loan *.45 due to taper rate. Take away petrol and my net gain was £1 something an hour. I decided to put my time into chainsawing windfall and stocking up sticks etc. batch cooking and doing stuff at home to reduce costs. I reckon I’ll of saved much more than I’ll of made especially when considering the cost of fuel.

Original poster

Cupofteaonesugar · 24/09/2022 08:25

But there isn't even an option to report a voucher on UC website?!

I'm so unbelievably annoyed by this 🥺

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womaninatightspot · 24/09/2022 08:27

Put it in your journal.

burnoutbabe · 24/09/2022 08:49

Very odd they are giving you vouchers as it just makes everything more complex and hmrc see vouchers as salary anyway.

As it's things you can easily convert to cash, which are generally treated as taxable , rose we'd all be given part of our pay in say supermarket vouchers to avoid tax.

Original poster

Cupofteaonesugar · 24/09/2022 08:50

@burnoutbabe no they have offered a lump sum cash as well but understood that doesn't suit everyone. The vouchers would be taxed next year.
Son I'm thinking my best bet is to take it over 6 months....

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burnoutbabe · 24/09/2022 08:53

Wouldn't the vouchers be taxed via you doing a tax return after April 23? And you'd be under the £12,500 so no extra tax due?

You need to check what they actually mean about "taxed next year"

Original poster

Cupofteaonesugar · 24/09/2022 08:57

burnoutbabe · 24/09/2022 08:53

Wouldn't the vouchers be taxed via you doing a tax return after April 23? And you'd be under the £12,500 so no extra tax due?

You need to check what they actually mean about "taxed next year"

Yes they would be. My salary is about £11000 but I had a bonus (which I saw none of with the UC deduction) so with this additional £1000 I would go just slightly over the tax bracket.
But if I jave to report it to uc there's absolutely no point in me taking the vouchers.

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BarbaraofSeville · 24/09/2022 09:05

No you wouldn't go over the tax bracket, that's nearly 13k. Even then you'd keep 80% after tax, before any UC loss.

You might lose most of it, but will keep some, so better than nothing.

BarbaraofSeville · 24/09/2022 09:06

Sorry misread but even with all the deductions you should never lose all the extra but might lose most of it.

Original poster

Cupofteaonesugar · 24/09/2022 09:41

I'm thinking if I take the payment over the space of 6 months I won't loose out on as much UC and have a slightly higher pay so maybe that's my best option 🤷🏼‍♀️

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SeasonFinale · 24/09/2022 09:58

You did see your bonus though and you will see benefit from the voucher. Yes your UC was refused and thus the tax payers burden was reduced. Please do not fall into the trap of not earning more because your benefits are reduced. The best case scenario is that you are in a position where you don't need to rely on any benefits

Original poster

Cupofteaonesugar · 24/09/2022 10:20

SeasonFinale · 24/09/2022 09:58

You did see your bonus though and you will see benefit from the voucher. Yes your UC was refused and thus the tax payers burden was reduced. Please do not fall into the trap of not earning more because your benefits are reduced. The best case scenario is that you are in a position where you don't need to rely on any benefits

I'm a single parent with very limited childcare options. I'm on a low salary and struggling with money.
I would love more then anything to not have to claim UC but I fall in to the margin of people who need it. I can't increase my hours and earn more to just pay more childcare. This thread isn't even about that. It's not as black and white as "don't fall into not earning more" etc. I never chose this life and as soon as o can get out I will.
I didn't see a penny of my bonus in fact I was out of pocket. I should've refused my bonus.
It's very hard for someone in my position to earn any more money without working above and beyond full time hours which is impossible.
Like any other responsible people I am calculating which option will benefit me the most.

Anyway, back to the point. Does anyone know if my calculation of the UC amount in correct on my previous comment based on spreading it across 6 months?

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Danikm151 · 25/09/2022 19:41

@Cupofteaonesugar the taper is 55p not 45p so you’ll need to calculate again.