Correct tax for small year end bonus?

[W124Bob]

My son has been given a year end £500 bonus which has been taxed at 40%, his salary is just over £19k PAYE , I've got no knowledge in this area and a quick online search seems to throw up conflicting info. Other employees treated the same. Is 40% normal given the low annual salary and no other extras .

[Plate spinner]

40% tax rate kicks in at about £33k I think, so not sure why his company have done that..

Easy enough to do an online assessment to get it back though, will literally take 15mins.

[CzechItOut]

Is his pay packet precisely £300 more than usual (£500 minus 40%)?

The bonus should be taxed at 20% Income Tax and 12% National Insurance, so he should expect to see £340 more than usual.

[supercommuter]

He should of got £400 of said bonus approx

[Eric Mc]

There will be NI calculated on the bonus too. The employee's NI is calculated at 12%

[J4CKO]

Whilst on the subject, I am being made redundant and will get three months Pay In lieu of notice, will I see three times my normal take home or will it we all be tax at 40 percent ?

Rules just changed, made to stay another month so the guys that left last week got theirs without tax, and I get hammered, thrilled about that as you can imagine.

[CzechItOut]

J4CKO said:

Whilst on the subject, I am being made redundant and will get three months Pay In lieu of notice, will I see three times my normal take home or will it we all be tax at 40 percent ?

Rules just changed, made to stay another month so the guys that left last week got theirs without tax, and I get hammered, thrilled about that as you can imagine.

If you're a basic rate tax payer you'll pay 20% Income Tax and 12% National Insurance.

It won't be three times your normal take home pay, as your normal pay takes into account the tax free threshold, which isn't applicable to bonuses or extraordinary payments.

[J4CKO]

CzechItOut said:

J4CKO said:

Whilst on the subject, I am being made redundant and will get three months Pay In lieu of notice, will I see three times my normal take home or will it we all be tax at 40 percent ?

Rules just changed, made to stay another month so the guys that left last week got theirs without tax, and I get hammered, thrilled about that as you can imagine.

If you're a basic rate tax payer you'll pay 20% Income Tax and 12% National Insurance.

It won't be three times your normal take home pay, as your normal pay takes into account the tax free threshold, which isn't applicable to bonuses or extraordinary payments.

So, as I am a 40 percent taxpayer will be taxed at 40 percent plus 12 percent NI ?

Jesus, I will get less than half of it, last week I would have got all of it. Got some holiday and pension contris back but going to get royally bummed.

Or is it 2 percent NI ?

Edited by J4CKO on Monday 9th April 20:43

[Alex Z]

I believe the change to 2% NI coincides with the higher income tax rate.

[CzechItOut]

J4CKO said:

So, as I am a 40 percent taxpayer will be taxed at 40 percent plus 12 percent NI ?

Jesus, I will get less than half of it, last week I would have got all of it. Got some holiday and pension contris back but going to get royally bummed.

Or is it 2 percent NI ?

Edited by J4CKO on Monday 9th April 20:43

It is 2% over about £46k.

[jonby]

J4CKO said:

Whilst on the subject, I am being made redundant and will get three months Pay In lieu of notice, will I see three times my normal take home or will it we all be tax at 40 percent ?

Rules just changed, made to stay another month so the guys that left last week got theirs without tax, and I get hammered, thrilled about that as you can imagine.

If you're pay in lieu is not something you are contractually entitled to, you may well be able to class it as non-taxed redundancy monies

If it is something you are contractually entitled to and you have to pay tax, you will of course be receiving it right at the start of a new tax year (starting 5th April) so you have a new year's tax free allowance to offset and then the basic rate tax allowance, although of course depending upon what you earn later in the year it will all catch up with itself

[J4CKO]

jonby said:

J4CKO said:

Whilst on the subject, I am being made redundant and will get three months Pay In lieu of notice, will I see three times my normal take home or will it we all be tax at 40 percent ?

Rules just changed, made to stay another month so the guys that left last week got theirs without tax, and I get hammered, thrilled about that as you can imagine.

If you're pay in lieu is not something you are contractually entitled to, you may well be able to class it as non-taxed redundancy monies

If it is something you are contractually entitled to and you have to pay tax, you will of course be receiving it right at the start of a new tax year (starting 5th April) so you have a new year's tax free allowance to offset and then the basic rate tax allowance, although of course depending upon what you earn later in the year it will all catch up with itself

Believe that the rules changed recently, hence why some got it untaxed, changed from the start of the new tax year.

No idea what will actually turn up, the Statutory bit isnt taxed but the PILON I am not sure about, am sure it will be taxed but not sure how they do it, all at 40 percent or using the bandings across the year like you say.

[W124Bob]

Having spoken to him again it appears to be the 20%+ 12%ni giving actual amount payed.