Bonus payments added!

by Admin

As requested by a large number of visitors to the site, The Salary Calculator has been updated to allow you to enter bonus payments. If you might earn a bonus from your employer one month, you can now use the calculator to see what kind of a difference it will make to your payslip that month.

Bonuses are typically paid as a one-off extra on top of your usual salary. Your employer will work out what extra deductions (tax, National Insurance and Student Loan) will be required that tax year because of this extra payment, and will add these on top of your usual deductions for that month. Yes, this unfortunately means that you’ll pay a lot of tax, NI and Student Loan that month (boo!) – but some of your bonus will be left for you to enjoy!

For the purposes of displaying the information The Salary Calculator assumes that your salary is normally paid monthly, and shows you what a bonus month would look like compared to a normal month. Similar calculations will be done by your employer if you are paid weekly. To get started, click here to check out The Salary Calculator with bonus payments.

Tags: bonus, bonuses, income tax, national insurance, Pay As You Earn, pension, tax rates, The Salary Calculator

Saturday, April 2nd, 2011 About The Salary Calculator, Income Tax, National Insurance, Pay As You Earn, Pensions, Student Loan

None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

183 Comments to Bonus payments added!

Hi – I am being told by my employer that my bonus payment will be subject to tax and NI PLUS the employers contributions. So for my £125 bonus I would only receive £85 – the deductions are employers tax, employees tax and NI – is this right? For the purposes of clarity, my employer has in excess of 1500 employees.

Thanks for your help

kim southgate on April 5th, 2011

Hi Kim,

If you normally earn enough to be paying tax on your income, it sounds like the deductions you will be facing would be the normal employee’s tax and NI.

Tax would be 20% of £125 = £25
NI would be 12% of £125 = £15

Total deductions = £25 + £15 = £40

Leaving you with £125 – £40 = £85.

If there are any other deductions from this your employer should be able to explain why they are being made – and if you’re not sure whether these deductions are correct the Citizens Advice Bureau will be able to talk things through with you. http://www.citizensadvice.org.uk/index/getadvice

admin on April 5th, 2011

Quick question about national insurance calculation:

Salary £423.08/week (£22,000.00/year)

NI 12% of £284.08 (£423.08-139) is £34.09 (£34.0896 to 2sf)

Therefore NI should be £1772.68/year (£34.09 * 52), is this not correct?

Your site calculates it as £1773.00/year and £34.10/week.

Mike on June 13th, 2011

Hi Mike,

The calculator actually uses the annual NI thresholds to try to be more accurate over the year (of course, employers might use the monthly or weekly figures, all of which will give slightly different results). In this case, the threshold is £7225 per year (about £138.94 per week).

£22,000 – £7,225 = £14,775
12% of which is £1,773
Divided by 52 for the weekly value is £34.10 (£34.0962 to 4s.f.)

So you can see that the difference between the different calculations is actually very small – employers are free to use whichever matches their payroll cycle, sometimes with results different from the calculator by a few pennies.

I hope this helps!

admin on June 13th, 2011

Hi
My basic salary is 19k a year
This month HR made mistake with my overtime and didn’t add it to my payslip so they had to make additional payment:

30.75 sat o/t = gross £351.11
>
> 17 week o/t = gross £170.82
>
> Total gross – £521.93
>
>
> A separate net payment will be made for you
>
> Total £365.35

Is this correct if my tax code is 810L ?

Thank you.

Ilko Dimov on August 3rd, 2012

Hi Iko,

It is hard to say, since the amount of tax and National Insurance (and perhaps student loan, pension etc) that you would be due on this overtime depends on how much you had already been paid for your “normal” hours. I would imagine that your employer will be trying to pay you the same amount in this additional payment that they would have added to your normal payslip if there had not been any problems. In which case, you can check this using the Salary Calculator (either the annual salary or hourly wage calculator).

Enter your normal salary / hourly wage, and leave the overtime fields blank. This should give you the “normal” take-home pay, before overtime. Then add your overtime using the two overtime options (remember to change the overtime rates from 1.5 and 2 if you need to), and see how much more the take-home pay would be in one payslip. Hopefully this will match the additional payment your employer has made.

For what it’s worth, if you deduct normal tax at 20% and NI at 12% from £521.93, you get £354.91, which is slightly less than the payment you have been promised. Your employer should be able to explain the deductions they have made, if you have any questions.

admin on August 6th, 2012

Hi, I’m not sure if I haven’t been underpaid on my bonus for many years. As per contract I should be getting 20% of my anual income.
My monthly payslip shows my income
as follow
standard 2295
bonus 225
after all deductions I get £1904
does this sound correct?
By my calculation I believe the bonus should be 459.
Please advise
kind regards
Suzy

Suzy on September 23rd, 2012

Hi Suzy,

I think you need to check with your line manager or with your HR / payroll department. From what you’ve said, I agree that 20% of the standard £2,295 is £459 – but your employer might use some lower, “basic” rate of pay to calculate the bonus, or have other deductions to make from the bonus.

If you ask your employer to explain, and compare with your contract, I’m sure they’ll be able to clear it up!

admin on September 24th, 2012

Hi,

I’m currently on a salary of 28k and this month am receiving a bonus of 3k. Obviously I understand I will be taxed heavily on this bonus as it takes my monthly salary over the tax threshold. However, because my overall annual salary will be 31k, how does the overpaid tax come back to me? Will I get this back each month in small parts (i.e. c. £50)? And will this be more than what is in the calculator?

Thanks,

Will

Will on October 6th, 2012

Hi Will,

The Salary Calculator works out bonus tax (and NI, etc) deductions by comparing your total annual income (i.e. £31k) with your “non-bonus” annual income (i.e. £28k). The difference between the amount of tax you pay on £28k and on £31k is used in the “bonus month” column in the calculator to show the correct amount of tax you should pay that month.

As you point out, though, in that bonus month it can look like you are going to earn a lot more over the year than in fact you will do. Your employer might do the same calculation as The Salary Calculator, and therefore only deduct the correct tax – or they might deduct more tax because it looks like you’re going to earn over the 40% threshold in that tax year. When this happened to me with my own employer, they corrected the tax by deducting less in the following month (and each subsequent month was back to normal). However, this might not be what your employer does. If you check with your line manager or HR department they should be able to explain.

I hope this helps!

admin on October 8th, 2012

Hi,

I’m currently on a annual salary of £25K and in line to receive a bonus payment of £30K, This will take my annual ernings over the £41K threshhold.Will I be taxed 40%

Thanks for any advise

Emma

Emma Jones on January 7th, 2013

Hi Emma,

Congratulations on your bonus!

As your income for the year will be over the 40% tax threshold, you will indeed be taxed at 40%, but only on the income that is over the 40% threshold – not on all of your income, or even on all of your bonus. Assuming that you get paid your bonus in one lump sum, in most cases you’ll have a lot of tax deducted in the bonus month and then deductions will go back to normal the following month. In my experience, some employers have to issue a small correction in the month after a bonus, if they took too much tax from the bonus the first time round. Your employer should be able to explain any such changes.

To see how your payslip might look with this bonus, enter the details of your bonus in The Salary Calculator.

I hope this helps!

admin on January 7th, 2013

My Company include business expenses in the calculation for bonus. i.e 3 x salary + 1 X expenses claimed as a threshold then a % of the excess is paid as bonus. Surely by including non-taxable expenses to arrive at a taxable bonus means it is indirectly being taxed?

Patricia on January 23rd, 2013

Hi Patricia,

I’m afraid I don’t have any information about this. As far as I know, an employer can decide what bonus to pay you however they like, as long as they correctly work out the tax and NI on that bonus. Also, the calculation you described does not equate to your expenses being taxed – only your bonus (and your normal salary) is taxed. If you want to speak to someone in more detail, I would suggest as a starting point contacting Citizens Advice.

admin on January 23rd, 2013

I have just found out I will get a bonus this month of £250 net. I received something similar in September and only actually got £182 in my pay. I spoke to HR and they advised they had included tax in the gross amount but not NI or student loan hence why I received less. Does this sound right? I thought £250 net you would get £250 in your pay packet?

RachieB9 on February 7th, 2013

Hi Rachie,

To be honest, I don’t know that there is a particular definition of a net bonus – The Salary Calculator only works with bonuses paid gross (i.e. with Tax and other deductions then applied). Your employer could have meant “net of tax” rather than “net of all deductions” but I’m afraid I can’t help. Sorry!

admin on February 7th, 2013

Hi I got a bonus of 380 this week in my wages but on my payslip it actually only said 312 then I was gCos and no on this I work for a agency and they have

Taken 20% before putting it on a our wage slips,r they allows to do this.

Chrissy on February 15th, 2013

Hi Chrissy,

I’ve not come across this before, but also I’m not aware of anything that says it can’t be done. If you check your contract it should contain some details about this or your line manager should be able to explain. I can also recommend speaking to Citizens Advice if you need more information.

admin on February 15th, 2013

hi im wondering if anyone can help me my wage was down 24 hours this month so it is bein g payed later than the rest i normally earn to little to pay tax a n i. my employers are telling me that out of 148 i will only recieve 12 pound as i also have an attatchment of earnings but have clearded the attachment up by speaking to the local council as they said this only needs paying once out my wage and it has been so there should be no deductions from that and was hoping somebody could calculate what tax and ni i should pay if this helps my tax code is 810L and i have only earned 4410 this year. thank you

josephine on March 5th, 2013

Hi Josephine,

As long as your total income for the year from 6th April 2012 to 5th April 2013 will be less than £7,605, you should not pay any Tax or National Insurance. Sometimes, if your pay in one month looks like it would take you over this threshold (e.g. because you worked extra hours), your employer might deduct NI and Tax from your pay – but if, the following month, you are back below the threshold you will normally get this refunded. If you are unsure how your employer deals with this their HR or payroll department should be able to explain it to you.

admin on March 6th, 2013

Hello There
i have earned 13800 gross last year and i am going to have a bonus of 17% as a propotion of my gross salary . Would you like to help me how much money will i get after tax . and my salary for this month is £350 gross other than bonus. So how much tax will i paid this month ? Thanks .

Sheeraz on March 7th, 2013

Hi Sheeraz,

Congratulations on your bonus! It’s difficult to tell how much tax you will pay because it seems like your salary is different each month, or at least different this month (£350 isn’t 1/12 of £13,800) and the Salary Calculator works with regular salaries only. To give you an idea of how much tax you might pay on the bonus, I would expect that you will have 20% deducted for tax and 12% deducted for National Insurance. 17% of your £13,800 salary gives a gross bonus of £2,346, so you would pay £469.20 tax and £281.52 NI, leaving you with £1,595.28 plus whatever is left of your salary that month. This does depend on your tax code and how much of your personal allowance your employer has already used up. If you are repaying a student loan or pay into a pension these might also reduce the amount you get to take home.

admin on March 7th, 2013

Thank you admin. Yes my salary was different every month . Our financial year was 1 feb 2012 – 31 jan 2013 , and my salary 13800 is for that period . Your bonus calculates on last year gross and get paid on next year in april. That is how it works . You can say my monthly salary was around 1150 gross. And i beleive your calculation is right . Thank you.

Sheeraz on March 8th, 2013

Hi,

I have a fixed salary and a variable monthly commission/bonus. This month we are subject to car loan settlements which are supposed to be netted off by the company. I need to try and understand if that’s been done accurately.
Fundamental info, My 10% pension comes off at source so tax and NI are applicable after the deduction.
After the tax and NI I have 3 more deductions for car (£25) holiday buy up (57.81) and travel insurance (£4.52)
My tax code is 765L my monthly salary is £3005, my bonus was £2171. (I’m a 40% tax payer)
With the basics above what should I expect to take home? My payslip says £3197

Thanks

Gemma on March 21st, 2013

Hi Gemma,

It’s actually a bit difficult to tell, because it might depend on how big your bonuses have been in previous months. It also depends on whether your pension deduction is 10% of just your salary, or 10% of your salary plus your bonus. The Salary Calculator only supports company pensions, and it sounds like yours is a salary sacrifice pension. It is probably best to compare this month’s payslip with last month’s, and see if the deductions you would expect to be the same are indeed the same. The payslip should explain what has been deducted and how – if you were expecting to have £25 deducted for the car loan settlement the payslip will show you whether that is what was deducted or not.

For what it’s worth, I’ve taken a look at the numbers and I found that if your pension is deducted from salary plus bonus, your take-home before the car, holiday and travel insurance would be about £3,252 – or £3,165 after the extra deductions. If your pension is only deducted from salary, then I make it about £3,433 after all deductions. However, these might depend on how much you have taken home in previous months. If you can’t get the numbers on your payslip to make sense, your HR or payroll department should be able to explain them to you.

admin on March 21st, 2013

Hi,
I have recently started a new job paying £34k p.a. For Q1 I will be getting a bonus of £5529.65 on top of my salary. How much is the tax man likely to take?
Regards,
Robert

Robert Thomson on April 1st, 2013

Hi Robert,

If you enter the details into The Salary Calculator, including your bonus (click on the Bonus tab), it will attempt to work this out for you. You will be able to compare the “Bonus Month” and “Normal Month” columns and see what differences there are (and therefore how much the taxman is taking!). If you are getting paid this bonus before 6th April, remember to change the tax year drop-down to the 2012/13 tax year.

The Salary Calculator estimates the effect of a bonus on the assumption that, for the rest of the tax year, you’ll be earning just your normal salary. If you receive a further bonus later in the tax year, the tax you owe on it will be affected by this earlier bonus. Also, as we are at the start of the tax year, your employer’s payroll software might take too much tax from you, thinking that you’ll be earning this larger amount every month. If this happens, generally the overpaid tax is returned in the following month’s pay.

admin on April 2nd, 2013

Hi,

Figures on your calc seem to be way out from what I get, but I’d be keen to know if yours is more correct, then I am missing out on money. Can you tell me what you think here.

Here is standard month. My wage is strange because there are some additionals which skew my salary (my salary is 25k if I ask the bank for a better deal on my mortgage, but 31k on paper!) There is also something about Health Insurance. I think the idea was that they pay me it, but deduct it from me, meaning I only pay the tax on it. But now I think I pay it aswell, not sure if I should have to pay the additional tax. Does this look dodgy?

Basic Pay: 2245.00
Allowance: 394.50
Health Insurance: 20.85
GROSS: 2,660.35

Health Insurance -20.85
Health Ins – EE Contribution -20.85
Income tax -401.40
NI Contribution -240.66

NET PAY: 1976.59
(seems to be a good 40-50 less than the calculator!)

This month I got a bonus. Feel I got slightly shafted in tax however….

Basic Pay 2,245.00
Bonus 2,240.00
Other Allowances 394.50
Health Insurance 28.50

Health Insurance -28.50
Health Ins – EE Contribution -28.50
Income tax -1,279.70
NI Contribution -365.47

Period Gross Pay 4,908.00
Net Pay 1,976.59

We’re a few hundred out here for sure? Ok its start of the tax year but surely they should know they haven’t just given me a 100% PAYRISE!!! Thanks!

Jimmy Jimmy on May 2nd, 2013

Arrgh pasted the wrong net pay, I didn’t get ripped off that badly! 🙂

Net Pay 3,205.83

Jimmy Jimmy on May 2nd, 2013

Hi Jimmy,

I think there are 2 questions here – one is about your normal monthly pay, and the other is about your bonus. Looking at the details you sent me of the normal payslip, it seems that you and your employer each pay half of the health insurance – and you also pay the tax on your employer’s contribution. If you enter the gross amount you provided, multiplied by 12 (£31,924.20) into the calculator and remember to select the 2012/13 tax year (I assume that the most recent payslip you have without a bonus would be in the last tax year), you’ll see that the Income tax and National Insurance deductions calculated are close to those made by your employer. I suspect that the difference (a few pounds) is due to your employer using monthly tables to work out the deductions, whereas the calculator works on a yearly basis. However, as you say, the take-home pay on your payslip is £40-50 less than that on the calculator. This is because the calculator doesn’t currently support deductions such as those you have for the healthcare – if you deduct £20.85 twice (your contribution and your employer’s) from the calculator’s result, you’ll get £1,978.47 – which is just under £2 from your payslip result and again, I think the difference is down to the different ways that employers can work out tax and NI.

On the bonus, I’m afraid I can’t quite see what’s going on. The National Insurance deduction matches closely to what you might expect if you had indeed had a pay rise to £58,896 per year. In my experience, this happens quite often and the following month’s payslip corrects for the extra tax that you have paid. It’s more likely to happen when you get your bonus in the first month of the tax year, too. However, even this doesn’t seem to explain the amount of tax that you have had deducted. If you had a new tax code for 2013, which was something like 500L rather than the standard 944L, that might explain it. I suggest you check with your line manager or HR / Payroll department and see if they can explain to you how they came to this amount, and whether it will be corrected in the next month’s payslip.

admin on May 3rd, 2013

Thanks for the reply! Was chancing my luck with the first request, makes sense the way you put it.

Regards the bonus though, glad I’m not the only one puzzled! My HR/payroll have not got back to me yet (I work in a company too big for its own good so everything is via a ticketing system rather than phone!) I am hoping it is rectified the following month, hopefully not end of year. My tax code is same as previous months, 449L. Fingers crossed, an extra few hundred might help next month!

If i meet any resistance I will redirect them to your calculator 😉

Jimmy Jimmy on May 3rd, 2013

That tax code seems to explain the amount of tax you’ve been charged this month. If you enter £58,896 as a salary into the calculator (this is what this month’s gross works out as an annual salary) and the tax code of 449L, you’ll get Tax and NI deductions very closely matching those on your payslip. There is still a discrepancy, but this is (again) down to your healthcare deductions – if you subtract them from the calculator’s take-home result you’ll get the same as your payslip. As you say, with the bonus deductions being worked out this way it will mean you’ve overpaid, as it’s just a one-off bonus – HR should be able to tell you how this gets rectified.

Good luck!

admin on May 3rd, 2013

Hi, I was made redundant from a job paying £20k a year on 23rd March, right at the end of the tax year. When paying my final redundancy, instead of putting the notice period through payroll, they bundled it together with my redundancy and paid it as a lump sum without tax.

They are now trying to reclaim this from me as HMRC have fined them for getting it wrong.

Could you tell me what the tax should have been on a £2000 payment had it gone through payroll as it seems was the correct thing to do.

Steve on May 5th, 2013

Hi Steve,

I’m afraid I am not familiar with redundancy payments and how the tax (and other deductions) are calculated. As you are a basic rate taxpayer, I would expect the tax to be no more than 20% of the payment (£400), but there might be National Insurance contributions to consider as well. I suggest you try Citizens Advice – see if they have anything on their website which helps or get in contact with your local bureau. Sorry I couldn’t help more!

admin on May 5th, 2013

Hiya,

I as hoping that you could help me understand my tax code/earnings.

My basic salary is £28k, but this month I received a bonus of £2400 (and will earn another £6000 in bonus before the end iof the year pushing my salary up to £36,400)

As I also receive a company car and fuel benefit, my tax code is k484.

This month, including car/sustainence allowance and bonus, I received total payments of £4841.52, however, I was taxed £1594 and paid £324 in N.I meaning that I took home £2632. This number seems incredibly low. I would have expected to take lose 20% in tax, meaning that I would take home closer to £3000.

I would really appreciate any advice or words of wisdom as I am pretty clueless when it comes to taxable allowances etc.

Thank you

Georgie

Georgina on May 20th, 2013

Hi Georgie,

First of all, congratulations on your bonus! I think there are two things at work here, and neither of them are good news for you, I’m afraid. If you enter the details you provided into the Salary Calculator, you’ll see that the results for a budget month match up reasonably well with what you have seen (the differences I think are down to your various allowances, which the calculator doesn’t support, and contributions to a company pension).

The first issue is that your tax code means that you don’t have a personal tax-free allowance – in fact, you are being charged extra tax, because of that company car and fuel benefit. This puts you in the 40% tax bracket – anything you earn over £27,165 (lower than usual because of your tax code) is taxed at 40%. So 40% of your bonus is being eaten up in tax.

The other thing is that when people get bonuses at the start of the tax year (i.e. April and May), often they pay a higher rate of tax than they should, because it looks like they’re going to earn more this year than really they are. The payroll systems thinks “if they earned that much every month, they’d owe loads of tax”, and so deducts it as though you got a bonus every month. This sometimes leads to employers have more tax deducted than necessary, and it gets refunded in their next payslip. Unfortunately, as you are already in the 40% tax bracket, I believe the correct amount of tax has been deducted. Unfortunately, because of the way National Insurance works, I think this effect might have meant you’ve not paid enough NI on your bonus, and you could find a further deduction of about £118 in your next payslip. The Salary Calculator bonus calculation suggests you should have paid about £442 in NI and you only had £324 deducted.

If this doesn’t sound right to you, I suggest you speak to your employer’s HR or payroll department, and hopefully they’ll be able to explain how all the calculations are done.

admin on May 20th, 2013

Hi,

I am trying to work out what my net monthly income will be after I have received a bonus and a pay rise 2 months into the financial year. My tax code is 944L

From 1st April 2013, my gross monthly income was £1408.33.

From 1st June 2013, my gross monthly income was increased to £1708.33.

In my June pay, I also received a £2535 bonus payment.

Can anyone help with working out what my monthly net income will be from my July pay onwards?

Thanks in advance

Chloe

Chloe on July 8th, 2013

Hi Chloe,

Congratulations on your payrise and your bonus!

You should be able to get a good idea of your take-home pay from July by entering your new annual salary (£1708.33 x 12 = £20,500) into the calculator – the fact that you earned slightly less in April and May will make the real values slightly different but with your payrise so early in the year it will be pretty close.

However, having said that, I have often found that more tax is deducted in a month with a bonus than you might expect – and a refund of the extra tax is given in the following month. You might also have paid slightly less National Insurance in June than you should have done. Both of these are likely to be corrected in July – so you might find that it is not until August that you get a payslip which matches what you would expect, from the calculator.

I hope that wasn’t too confusing!

admin on July 8th, 2013

Hi.

My annual salary is 18000 but I tend to earn about £400-£500 a month in bonus. This month I’m due to get an inflated, one off bonus of £1989 on top of my basic. How will it affect my tax this month and do you have a rough idea of my take home?

Any help would be much appreciated.

Thanks,
Liam

Liam on July 18th, 2013

Hi Liam,

With so many different bonuses throughout the year, it’s tricky to say for sure. And I’m not sure whether this bonus of £1,989 is on top of your usual £400-£500, or instead of it. However, I think you could get a good idea of what your take home will be by using the Salary Calculator but entering a salary of about £23,000 (this is your £18,000 plus about £5,000 for your usual bonuses). Then enter your £1,989 bonus, and the results should be a reasonably close estimate of what your take home will be.

I hope this helps!

admin on July 19th, 2013

hi was woundering if u could help my annual salary is 21000 and am due to get a 1 off bounus of 3750 and was wanting to no what deductions will be taken off thanks

samtell on August 19th, 2013

Hi Samtell,

The easiest way for you to find out would be to use the bonus option on The Salary Calculator. Enter a ssalary of £21,000 and, on the “Bonus” tab, enter the £3,750 bonus you are receiving. You can enter other details like your tax code or pension deductions as well, if they apply to you. The calculator will show you how much you’ll earn for the whole year, as well as a comparison of a normal month and the month in which you get your bonus. Your employer might perform the calculations differently, which might mean that when you get your payslip you see some differences – but normally those differences are cancelled out in the following month.

I hope this helps!

admin on August 19th, 2013

Hi
My tax code is currently 944L and this month ive earned a bonus of £1000.00, could you tell me how much Ni and tax i should pay on this bonus as im not sure if what i have picked up is correct.

Many thanks

Rebecca on August 27th, 2013

Hi Rebecca,

How much tax and NI you will pay depends on what your normal salary is. If you go to the Salary Calculator, enter your salary and enter £1,000 into the bonus tab, the calculator will show you a comparison of a normal month and the month in which you get your bonus. This should help you see how much more tax and NI you will pay.

Sometimes, because of the way employers work out the deductions, you might get charged more tax and less NI in the bonus month than the calculator suggests. Normally this is corrected in the following month. If you are still unsure of the deductions that are made, your HR or payroll department should be able to explain things for you.

admin on August 27th, 2013

Hi I was wondering if you could help me to answer a question that I have about my salary and bonus payment?

I was paid a bonus in June 2013 (1864.25 gross. I was actually paid the net of 1278.27). Because I am now leaving the company before March 2013 I have to pay back my bonus.

We also have a 13 salary scheme, and as I am leaving in October, I will receive 10/12 of this amount.

My payslip for October will consist of my normal pay, plus 9/12 of my 13th month salary, minus the GROSS of my bonus.

I understand that the company paid my PAYE and NI on my behalf, so they should receive the full amount back however will I be able to claim the the PAYE and NI back from HMRC, or is this lost in the ether? I wasn’t sure if they would be able to spot this on my P45 when I leave, the PAYE and NI versus the amount I was paid (taking the bonus repayment into account).

Please ease my confusion!

Thanks 🙂

Ash on September 19th, 2013

Hi Ash,

That’s certainly a complicated situation you find yourself in! My experience of these matters is a little limited, but generally your employer will work out your tax and National Insurance according to everything that’s coming and going on your payslip, so your deductions from normal pay will be reduced due to your bonus being taken back. They may even refund tax and NI if they’ve taken more than they needed to (I once found myself in a similar situation, where my pay for the month was cancelled out by my bonus being taken back from me, and the only reason I got anything at all was a refund of the tax on the bonus).

If it doesn’t all get sorted out on your payslip, the P45 will tell your next employer how much you have earned so far this tax year, and how much tax you have paid, so they should be able to correct it for you. And, if it is still not corrected by the end of the tax year (5th April), you can contact your local tax office and apply for a refund. Your current employer’s HR or payroll department should be able to explain any calculations on your payslip so hopefully it all gets sorted out swiftly!

admin on September 21st, 2013

Hi

I am currently on a yearly salary of £31,093 which i am paid every 4 weeks. My tax code is 925L and I am repaying a student loan under repayment plan 1. I also pay into a salary sacrifice pension at a rate of 6.43%.

I am due a £1600 bonus in my next 4 weekly pay. How will the tax of this be worked out as the salary calculator only tells me my take home amount on the basis of a monthly wage.

Many Thanks

Rob on November 13th, 2013

Hi Rob,

The Salary Calculator has been updated so that now when you enter a bonus amount, you can choose your pay period (frequency) from a drop-down. If you choose the “4-weekly” pay option, along with entering all the information you provided in your comment, you should get a good indication of how your bonus payslip will look. More information is in this new blog post.

I hope you find this useful – and thanks for taking the time to answer the question!

admin on November 14th, 2013

Hi I am a single mum with one child – I work 24hrs per week @£9.00phr x 52 weeks. I received tax credit but no childcare credits. I have been luckier enough to have been awarded £1000 bonus for December a one off payment). My salary monthly is different amounts as it is worked out on a daily basis rather a fixed amount monthly ie x 52 or x 12. Can you tell me how I stand with any taxation and also if this will effect my tax credits payments for next year? Many thanks.

Sue on December 4th, 2013

Sorry I actually work 20 per week not 24 – it just feels like it !!!! LOL!

Sue on December 4th, 2013

Hi Sue,

I’m afraid the Salary Calculator only shows regular payments (i.e. annual divided by 12, 52, etc), so it’s not possible to see exactly how your payments will work out from month to month. However, If you enter your details in the Hourly calculator and enter £1,000 in the Bonus tab, the “Bonus Period” column should give you a close idea of what your payslip will look like. Assuming you have the standard tax code, you will have to pay some tax on your bonus, and additional National Insurance, but you will get to take home more in December than in normal months!

I’m not familiar with all the details of tax credits. Since the amount of tax credit you receive depends on your income, this bonus may change how much you are entitled to. There is information on the HMRC website about how your entitlement changes depending on how much you earn, but this depends on your specific circumstances. More information is available on this HMRC page under the heading “Will you qualify based on your income?”. I hope this helps!

admin on December 4th, 2013

Can you tell me what PayPlus EE is as it has recently appeared on my wage slip as a deduction

Susan Kelly on December 8th, 2013

Hi Susan,

Unfortunately I don’t know what PayPlus EE might be – I can only suggest that you ask your line manager or HR/Payroll department if they can explain it to you.

admin on December 8th, 2013

Hi there,

I was trying to use the calculator but it wont load for some reason! I normally earno 1600pm before tax but in february I will be recieving my annual bonus of 1400 making my wage 3000. Can u tell me how this will affect my tax n ni?

mark on December 9th, 2013

Hi Mark,

Sorry to hear the calculator wasn’t working for you! It should be fine now – try entering your details on the salary calculator and you should get the information you were looking for. If it’s still not loading for you let me know!

admin on December 10th, 2013

Hi
My tax code is 944l which is 9440 personal allowance and at the end of the tax year I will have earned just over that was wondering do I pay tax on all my earnings or do I just pay tax on what I earned over my allowance ?

Adi wickes on January 7th, 2014

Hi Adi,

You will pay tax only on your earnings over the personal allowance – everything under your £9,440 allowance is tax free. However, you will pay National Insurance on anything over £7,755 (unless you are exempt). If it looks like you will earn more than these allowances, your employer should already be making the correct deductions – they spread the deductions throughout the year so you don’t get a hefty hit in the last month of the tax year.

Enter the total amount you expect to be paid for the current tax year into The Salary Calculator, and see how much tax and National Insurance should be due.

For more information about tax rates and thresholds, check out the Salary Calculator’s about page.

admin on January 7th, 2014

I can’t manage to use the calcultor to help with the problem below

can you help?

Company car

I have been offered the option of a company car and fully expensed fuel card.

I have a few questions about what this will actually cost.

Firstly working out the taxable allowance I have followed the tax calculator which has given me two scores

The taxable benefit for the car is £5580

The calculator tells me the following:

At a 20% tax rate – the price is £97 per month.
At 40% tax rate – the price is £193 per month

My problem is I am not sure if I am classed as a 20% rate or 40% rate.

My basic salary is now £38,000pa. My current tax code is 8994L.

Therefore I believe this will mean I should pay the rate at 20%

That said because I work in sales I do make bonus. Therefore every 3 months I can be paid a bonus. On avaerage this may be £5k.

Therefore for 8 months per year my pay slip will look like I earn £38k a year however when my bonus comes in the salary for the month is a lot higher for that month and overall my OTE with basic salary and bonus for the year will be around £55k

Therefore due the fluctuations I am keen to understand what my monthly payment will actually be? I don’t know what bracket I will fall under?

I really would like to understand how much tax I would pay per month?

Secondly

I will also have a company car fuel card fully expensed.

The calculator has also given me two figures for this as well.

Therefore I will be paying either

20% tax rate – £63.
40% tax rate £126

Therefore again does this fluctuate depending on whether or not I get bonus or do I only pay the highest rate all year round?

I am really keen to understand whether or not I am in the 20% or 40% bracket as my basic indicates I am on only earning £38K

Therefore does the tax code depend on your basic salary or your basic salary + OTE?

Finally as for the company car fuel tax figure. Is this taken out monthly or do I pay a lump sum at the end of the year?

For instance if I am on the 20% code do I only pay £63 per month for 12 months meaning the total cost of fuel tax per year is £756 regardless of personal or private miles.

Or will I have to make another payment dependant on what my final personal miles work out to be.

Ultimately I am eager to understand what this company car will cost me monthly and over the year.

Any help would be useful

Thanks

rob on January 7th, 2014

Hi Rob,

Wow, that’s quite a question! The Salary Calculator doesn’t support company car calculations (as there are so many different variables in working out the charges), so I’m not an expert. However, in most cases, the extra tax is charged by changing your tax code to reduce your tax-free personal allowance. Because your personal allowance is lower, you’ll pay more tax each month, and how much more depends on whether you’re in the 20% or 40% band.

Just as your current tax deductions fluctuate throughout the year, depending on whether you’re getting a bonus that month or not, the same will be the case with your new tax code. The long and the short of it is, however, that (given the figures above) you are well within the 40% tax bracket so the 40% tax implications are the ones most applicable to you. It might be less one month than the next, but over the year you’ll be paying 40% tax on the car and fuel benefit.

I’m afraid I don’t know how the fuel benefit is charged, but I believe it is also included in a reduced personal allowance.

Based on the numbers you gave above, I think the company car and the fuel benefits together would be enough to reduce your personal allowance to zero, and in fact a little below. Try entering a tax code of 38K in The Salary Calculator to see how your take-home pay would be different.

I hope this helps!

admin on January 7th, 2014

Hi just wondered if you can help. I have been paid a bonus and wanted to check if it all adds up correct! So:…

Gross income is £43000 (my salary was increase this year from £38500 and they back dated the pay to January , so this month I was paid the additional difference for Jan and on the new salary of £43,000 for Feb)
bonus is £6850 (this is paid in one month which was at the end of Feb)

It says that i come out with £6787
does this look correct.
thanks for your help!
M

Marianne on March 4th, 2014

Hi Marianne,

Congratulations on your bonus (and payrise)! If you enter your salary, bonus and other details into The Salary Calculator, you should be able to check the calculations. I assume that your bonus of £6,850 doesn’t include the backdated pay for January? In that case, you’ll have to enter a bonus of £6,850 plus the additional salary for January, which I believe should be £375, making a total “bonus” of £7,225.

Your takehome pay will depend on your tax code and other details (like whether you pay into a pension), but the calculator will show you a breakdown of the deductions so you should be able to see if there is a difference, where it occurs.

It is quite common, when you get paid a bonus, to pay more tax on the bonus than you needed to – this is because the tax is worked out assuming that you will continue to earn that much for the rest of the tax year. Normally what happens in this case is that the extra tax you paid is refunded in your next payslip.

I hope this helps!

admin on March 4th, 2014

Hi There,
I wonder if you can help… I am due to earn a large bonus of between £7-10k next month on top of my normal wage of £2k.
Its important to mention that I do earn bonus each month but more usually between £100-500 a month.

I dont understand how tax works.. will I be tax’d 40% that month… or does the 40% bracket kick in later in the year when I have actually earnt over £40k?

If it is taxd in the month.. and I dont earn £40k in the whole year how am I refunded the extra tax I have paid?

Thanks and I hope this makes sense!

Emma on March 7th, 2014

Hi Emma,

Try entering your salary into the Salary Calculator, including your bonus and any other details, and it will give you an idea of how much tax you are likely to pay.

An over-simplified explanation is that the tax thresholds and your personal allowance (what you can earn tax-free) are spread evenly throughout the year – so if on month’s pay is more than 1/12th of the 40% threshold, you pay 40% tax that month but only on the amount that is above the 1/12th threshold. This does sometimes mean, as it might in your case, that you pay higher rate tax even though you won’t actually earn over the 40% threshold for the year. If this happens – don’t worry, you can get that tax back. Normally your employer will correct it in your next payslip with a lower tax deduction or even a refund, and if they don’t you can contact HMRC and they will refund it for you.

A complicating factor that can determine whether this happens to you or not is when in the tax year you get your bonus. If you get your bonus in March, it is likely that they’ll get the tax right first time, as it is at the end of the tax year and they know how much you got paid for the rest of the year. However, if your bonus gets paid in April, the payroll system doesn’t know what you’ll earn for the rest of the year, so it is likely to assume you’re getting that bonus every month, and therefore will tax you as a higher rate earner. As I said above, though, you will get that tax back. If you have any questions, your employer’s payroll department should be able to explain more.

admin on March 8th, 2014

Hi I was wondering if you can help. My annual salary is £18000 and I get paid monthly. I pay back my student loan using option 1, 2% pension contribution and £17 a month to buy extra holidays in work. I am getting a bonus of £465 this month. DO you know what I can expect my take home pay to be? Thanks!

Kate on March 21st, 2014

Hi Kate,
You should be able to see your calculation by entering all your information into the Salary Calculator, including your bonus. You need to choose the right kind of pension contribution (employer, salary sacrifice, etc). The £17 per month for extra holidays might be before or after tax – enter it into the correct field on the “Other Deductions” tab.
Please note – if you are getting paid your bonus in April, the first month of the tax year, you might find that your tax is higher than the calculator displays. In most cases your employer will correct the over-taxation in the following month’s pay.

admin on March 22nd, 2014

Hi – I have a question regarding deductions from salary. I currently earn £30,900 a year but starting this month I am taking on extra responsibilities which will be paid quarterly as bonuses on top of my monthly salary. The bonuses will amount to £4000 a year. My question is, will I be deducted more through NI and student loan (Plan 1) by receiving these additional payments quarterly than if they were paid monthly? Would appreciate any help.

James on April 16th, 2014

Hi James,

Congratulations on your bonuses! While of course you will pay more NI and student loan because you are earning more, I don’t think you will pay any more than you would if you had a salary of £34,900 instead of your bonuses – and you might even save a little on NI.

Student loan repayments are 9% of earnings over the threshold (currently £16,910). You currently earn over that threshold, so any extra money you earn will have 9% deducted – whether you get it in bonuses or not. With NI the story is similar, but the rate is 12%. However, if you get paid more than about £3,489 per month, the rate for any extra drops to 2%. Since you’ll go over that threshold in a bonus month, you’ll save a little because you wouldn’t go over that threshold if you had a £34,900 salary. However – some back-of-an-envelope calculations suggest that the difference is not huge – possibly £34 per year.

admin on April 17th, 2014

hi
i earn 25k a year but pro rata, our normal working week is 37.5 hours and i work 32. i have just been told i am going to get a £500 bonus but from your site it looks like i will get about £20 of this?!
I am on a student loan repayment plan 1 but other than that nothing else comes out. i was paying for childcare vouchers at £243 but these are stopping the month my bonus gets paid. But when i look in the monthly column the difference between me including the 500 bonus and not is about £20?
Thanks

Lola on April 25th, 2014

Hi Lola,
Thanks for getting in touch! The pro-rata calculator wasn’t showing a side-by-side comparison of a normal pay period and a bonus period. I’ve fixed this, so now you see both results. I hope you’ll now see a result more like what you were expecting!

admin on April 28th, 2014

Hi
I’m desperately looking for the reference for UK tax rate for bonus (annual bonus if possible please). If anyone could give me the link, i would be a great great help for me.
Thanks

Nick Le on April 30th, 2014

Hi Nick,
The UK tax rate for bonuses is exactly the same as for any other income. You get an annual tax-free allowance (currently £10,000), and pay 20% tax on anything over that. There are higher rates of tax (currently 40% and 45%) if you earn over certain thresholds – if your bonus takes you over one of those thresholds, the amount you earn over the threshold will be taxed at that higher rate. More information about tax rates and other deductions (such as National Insurance, which also applies to bonuses) is here: http://www.thesalarycalculator.co.uk/about.php

admin on April 30th, 2014

Hi,
I currently have a salary of 37000. A previous employer has been sold and I am getting a payment
Of £30000 as they are closing down an internal share scheme and paying us the value. This payment will be in June and we have been told we will be takes on it before we are paid. Will my monthly salary after this payment be taxed at 40% every month until April 15?

Andrew on May 2nd, 2014

Hi Andrew,
From what you said, it sounds like this £30,000 payment is unrelated to your current salary – it’s from different employers and isn’t being paid through your current employment? In which case, I would expect your monthly take-home to be unaffected by this windfall. Also, the tax-free personal allowance and the income at 20% is spread throughout the year, so you would only pay 40% in a month when your income goes over one twelfth of the 40% threshold.
However, this extra £30k may be taxed differently – as it comes from a disposal of shares, it might be subject to Capital Gains Tax rather than Income Tax, which is something I have no experience of. If you aren’t able to get answers to your taxation questions from the administrators of the £30k payment, I would suggest asking Citizens Advice if they can help.

admin on May 2nd, 2014

Hi,
I am entitled to a bonus, based on the profit of my company, for the year ending 31 December 2011. At the company board meeting, on 1 March 2012, this bonus was agreed at £20,000 and was paid with my May 2012 salary on 31 May 2012.
My question is whether i need to pay tax for this bonus on the tax year of 2011-2012 or 2012-2013.
Thanks for reading!!!

Nick Le on May 3rd, 2014

Hi Nick,
In my experience, bonuses paid by an employer are taxable when they are paid (in your case, May 2012), even if they are due to performance in a different tax period. However, this may be different if you are a director of the company, rather than an employee. Employee’s bonuses normally have the tax deducted from them at source (i.e. by the employer), in which case you would not need to pay additional tax. If your employer is not able to explain your payments to you, an accountant should be able to provide you with more information.
I’m sorry I couldn’t help further!

admin on May 3rd, 2014

Hi, I am on an annual salary of 39000 and received an annual bonus of 3500. They have taxed £1332 and took £91 insurance on the bonus (we were issued a seperate wage slip for the bonus) does this seem correct?

Kelly on May 23rd, 2014

Hi Kelly,
I’ve entered your values into The Salary Calculator, which indicates approximately an extra £93 in National Insurance and an extra £827 in tax being due on your bonus. As you will have noticed, this is less tax than you have had deducted on your payslip. This is probably because your bonus was paid near the start of the tax year, and employes’ payroll systems often work out the tax due if you were to earn that much every remaining month of the year. Assuming that next month your income goes back to normal, you should get a refund of the extra tax you paid. Your employer’s HR or payroll department should be able to explain this is more detail to you if it doesn’t make sense!

admin on May 23rd, 2014

Hi my husband is currently paying back tax from 2006! Which we actually thought he had finished paying last year but yet again received another letter saying he still owed £490 so will take from 2014-2015 tax year and his tax code has changed to reflect this underpayment. I’m wondering what will happen when he gets his yearly bonus in as the tax code will be at the reduced rate but they will still take tax at that, which surely would mean he would end up paying them more then what he was originally due to pay back over the year? Every year he has a tax letter it’s just getting ridiculous! They re so unhelpful it’s literally sorry you’ve got to pay it back that’s it!

Ju on June 6th, 2014

Hi Ju,
When a tax code is altered to take account of underpaid tax, it should correct this underpaid tax as long as your income in this year is about the same as last year. I think it might be possible that, if your husband became a higher rate tax payer because of his bonus and would not have done so on the “normal” tax code, then he might pay more tax than necessary – but otherwise his bonus won’t affect this. This would either be corrected later in the year, or with a refund, or with a tax code for 2015/16 that corrected for overpaid tax! Please note that, as a number of people have found, it is common to pay more tax than necessary in a bonus month, and then to have a reduced tax deduction the following month to compensate.

admin on June 6th, 2014

My base salary is £35,000, and I am receiving a bonus (comission) this month of £4,800. The Salary Calculator says thats a gross income of £7,716.67 with taxable income at £6,882.92 and Tax that month of £1,376.58 (NI £423.65). Leaving me with take home that month of £5,916.44.

I’ve just received my payslip at work, which states that my taxable pay is £7716.67 paying tax of £1992.55 leaving a Net pay of just £5300.45.

Could you please explain why there may be a discrepancy here of over £600?

Thanks,

Toot on June 25th, 2014

Hi Toot,
Often people find that when they are paid a bonus near the start of the tax year (which we currently are – it starts in April), more tax is deducted then they would expect. This is because their employer’s tax software has to work out the tax as if they earned that much every month for the remainder of the tax year. If you were to get a bonus every month, you’d earn a lot more in the year and your tax would be higher – and it’s this higher tax that is deducted. However, The Salary Calculator knows that this is just a one-off, and works out the total tax you’ll have to pay for the whole year. This is lower (in your case by about £600).
So what happens about the extra tax you’ve paid? Assuming that your pay goes back to normal next month, the extra tax you’ve paid will be refunded in your next payslip. Your employer’s HR or payroll department should be able to answer any more questions about how they work out the deductions.

admin on June 25th, 2014

Hi

I’m currently earning £27,500 with a 4K car allowance and this month I’ve earnt commission of £4760. The salary calculator says I should take home £5,600 but Payroll have just told me my pay is £4627 how is there a £1,000 differential

David on July 23rd, 2014

Hi David,
It’s hard to be sure without more information. Do you earn commission every month, or just this month, or every quarter (or with some other frequency)? If you don’t have the standard tax code (possibly because of your car allowance) then your tax would be increased, too.
The most probable cause is that the calculator works out the tax (and NI, etc) due if you earn just one bonus in the tax year. In your case, one bonus like this is not enough for you to pay 40% tax. However, if you earn these bonuses more regularly, it might be enough to take you over the 40% threshold, meaning more tax needs to be deducted from the bonuses. Because of this, most people find that their employer’s payroll system works out their tax as if they earned at that rate all year round. I don’t quite mean that it works out the tax as if you got a bonus every month (although if you had earned more than your salary so far this year, that would be true), but rather the average amount you’ve earned so far this tax year, scaled up to the whole year. Your employer has to take the tax at this rate, in case you do go on to earn that much throughout the year. However, if in subsequent months your earnings go back down to normal, the tax you’ve overpaid is normally refunded in the form of reduced tax deductions in your payslips. As you will see from the other comments on this post, it’s a common thing to happen, and its effects are larger the closer to the start of the tax year your bonus is paid.
In short, the calculator works out the tax for the whole year, your employer has to work out the tax on a month by month basis and then correct it in subsequent months if they deduct too much tax. I hope this helps!

admin on July 23rd, 2014

Hi, My bonus payment is £1950 this has been paid separate to my monthly salary.
I have been deducted 32% £624
In April I received a bonus of £500 along with my salary before tax £1833.33 = £2333.33 deduction amount £497.44
How come my recent payment has a higher deduction amount but the amount was lower?
Reply for my query..

If you ask Eve to compare her April and May payslip she will see that the difference in her net pay was £340.20.

When you divide this by 68% it comes back to the additional gross bonus amount of £500.

We have applied the same deduction proportion for her August bonus.

Does this sound right?
Thank you in advance

Eve Geary on August 6th, 2014

Hi Eve,

I’ve run the figures you provided through the calculator, and it calculates that your additional deduction for a £1950 bonus should be about £595 rather than the £624 that has been deducted. The 32% that is being used by your employer is made up of 20% income tax, and 12% National Insurance. However, National Insurance is reduced to 2% on earnings over £3,489 per month. Since your salary plus bonus this month will be £3,783.33, I believe that last £294.33 of your pay should have only 22% deducted (20% income tax + 2% National Insurance). As your bonus was paid separately from your salary, it may be that your employer will correct the National Insurance deduction in your normal salary payment – i.e., deduct less NI to make up for the slight over-deduction on the bonus. They may also have reason to believe that you haven’t crossed the NI 12% / 2% threshold, perhaps because of different pay periods.

Something just to be aware of is that with your bonus this month, you are right on the cusp of paying 40% tax (this month). As others who have commented on this blog have found, you might find when your salary comes in that the NI deduction is lower but the income tax is a bit higher because some of it has been calculated at 40% instead of 20%. If this does happen, it should be corrected in the following month, assuming that your income goes back down to normal.

If you are unable to get a satisfactory explanation from your employer of the deductions, Citizens Advice may be able to help.

admin on August 6th, 2014

Thank you for your reply.
Since my last email I have now received my payslip for August.
This is showing..
1833.33
Bonus 1 1950.00
Total Gross Pay 3783.33
Taxable Content 3783.33
Deductions
Type of deduction Value
Paid By Bacs 1326.00
Sub-Total 1326.00
Income Tax 748.91
NI contribution 345.01
Total Deductions 2419.92

I am now coming out with £132 less than my normal pay?

Eve Geary on August 27th, 2014

Hi Eve,

Since you’ve already been paid your bonus (less the estimated deductions they worked out at 32%), you would expect your end-of-month payslip to be the same as normal months. However, your employer has done the tax calculations for the whole month, including your bonus, and now they need to correct the deductions from the estimated £624 they applied to your bonus payment.

In my previous message, I said that the £624 deduction was (I thought) a little bit too much – so you might have thought you’d get a bit of a refund in this payslip. Unfortunately, as I also said in my previous message, your income this month is enough to take you over the threshold from 20% income tax to 40%. Your employer’s calculations show that you have to pay more tax on your income than you normally do, so they’ve had to deduct even more than the £624 they took off your bonus.

I understand that this is annoying and confusing, but in my experience your employer is doing the right thing. They are instructed by HMRC to deduct tax as though you were going to earn that much all throughout the year, and with your bonus(es) you are put into the 40% threshold. However, if your income goes back to normal next month, they’ll normally refund you the extra tax you paid this month, so it will even out in the end. If you keep earning bonuses, you’ll pay tax on them appropriately and by the end of the tax year it will be correct.

The Salary Calculator works out your tax due for the year, based on your bonus and your salary – your employer has to work it out month by month, and sometimes it fluctuates month to month – but over the year, it will even out. As I mentioned in my previous comment, Citizens Advice are often able to explain these matters if you can’t get the information you need from your employer.

admin on August 28th, 2014

Hi, I usually earn approx 53k a year, I have been on full pay maternity since July but will shortly be dropping to 50% of my salary for 3 months and then just smp for a further 3 months. From April to date, my monthy earnings have obviously taken me over the 40% threshold and I have paid tax accordingly, when my salary drops I will be below the threshold for the tax year 2014/2015. Does this mean I’ll be entitled to a tax refund?

Thanks

Jess

Jessica Browne on October 12th, 2014

Hi Jess,
The short answer to your question is I think “Yes” – you will have paid more tax on your income so far this tax year than you would need to, once the rest of the tax year is taken into account. It is likely that your employer will correct this for you in your payslips between now and April, by reducing the tax deducted to cancel out the amount you’ve overpaid. If they don’t do this, you may have to apply to your local tax office for a refund. Your employer’s HR or payroll department should be able to tell you how this will work.

admin on October 13th, 2014

Hello ,can someone explain me what back dated pay means? It is my first salary in uk,i am earing 17000/year but on this first pay slip i received 849£ backdated pay. So i dn tknow how to calculate the tax. Thank you

Lavi on November 29th, 2014

Hi Lavi,
Back dated pay means pay earned in a previous period. Your payslip will normally have details of how much you have earned in a particular period (normally a week or a month), and how much tax was deducted for that period. Back dated pay would be pay that you earned in the previous week or month but which didn’t appear on that period’s pay slip. This often happens if someone gets a pay rise, and the effective date for the pay rise is in the past. In your case, it might be because you did some work in October but didn’t get a pay slip for it – and now it is included on November’s pay slip.
What it will mean for you is that this pay slip will have more pay on it than usual – probably your next payslip will show the amount you would expect for your salary.

admin on November 29th, 2014

Hello,

I started this job on 7th July and I’m on a salary of £17000 per annum. In my November pay cheque I was given a bonus of £338. I’ve been charged £98 on it.

How have they worked out £98? I have tried various calculations with no success. Also I am not at the £10000 threshold so should I even be paying tax?

Thanks in advance

Rob on December 12th, 2014

Sorry, that’s not very clear.

I was paid £338 bonus and I ended up paying £98 tax. How have they worked out the £98?

Rob on December 12th, 2014

Hi Rob,
Your tax-free allowance of £10,000 is split evenly throughout the year, so you get a certain amount tax free every month and then pay a little bit of tax every month (even though at the start of the year you won’t have reached £10,000 yet). This is so that your tax is deducted evenly throughout the tax year – otherwise you wouldn’t pay any tax at the start of the tax year and then you’d have to pay a lot more at the end to make up for it. Splitting it through the tax year makes it easier for you to manage.
You pay tax at 20% (after your tax-free allowance), so the extra tax on your £338 bonus would be £67.60 – but you will also have to pay additional National Insurance at 12% – another £40.56. I would therefore expect the total extra deductions on your bonus to be £108.16. However, the National Insurance contribution might be reduced if you are a member of a pension scheme (depending on the scheme).
If this £98 doesn’t include National Insurance (I’m not sure from your comments whether it does or not), it’s possible that they have included Student Loan repayments. If you have a “Plan 1” Student Loan to be repaid, on your normal £17,000 salary you would only repay 68p per month – but in the bonus month it would go up to £31.10. This plus the £67.60 tax I mentioned above would be £98.70.
I hope this has helped in some way – if you’re still not able to see how your employer has come to this figure I would suggest you ask your manager or your employer’s HR or Payroll department if they can explain it for you.

admin on December 13th, 2014

Hello, thank you for your response. I’ll aim to provide a bit more information.

I am a student in my 3rd year of university and I am on a Year in Industry. So far I haven’t paid any tax so I don’t think it’s being divided up through the year. My NI code is A and tax code is 1000L. My contract says my salary is £325 per week.

I have checked all my other pay cheques and they seem right. I just can’t work out this one. It says:

BASIC PAY PENSIONABLE 1300.00
BONUS 338.00

Tax Paid 98.00
NI Contracted In 117.00

The Cumulatives say:
Total Gross 7163.00
Taxable Gross 7163.00
Tax Paid 98.00
Employees NI 461.76
Employers NI 531.04

Any idea why I have been taxed £98?

Rob on December 15th, 2014

Hi Rob,
Thanks for the extra info. I’m not sure, but I think it might be because you weren’t working in the first 3 months of the tax year (April, May and June). In previous months, they’ve worked out the tax due based on how much you owe at the rate you’re earning over the year. You can earn up to £833 (£10,000 / 12) each month without paying tax. In July, you earned £1,300 but considering the previous 3 months that’s only £325 per month. In August you’d earned £2,600 over 5 months, September £3,900 over 6 months, etc – each time, not more than £833 per month.
However, now you have earned £7,163 over 8 months, £895 per month, more than the £833 threshold. Another way to look at it is that by the end of November you could earn £6,666 (£833 x 8) without paying tax, but you’ve earned £497 more than that. Your employer has probably used tax tables to round this down to £490, meaning tax at 20% of £98. Obviously, this would mean that you will also pay tax on your subsequent payslips, assuming you continue to earn at your current rate.
I’m not sure this is the explanation, but it does seem to match up with the tax you’ve had deducted. Normally tax is spread throughout the tax year as I mentioned before, but perhaps your employer is treating you as temporary staff or similar, with no assumption that you’ll continue your employment with them for the whole tax year.

admin on December 15th, 2014

Okay that makes sense. Thank you! 🙂

Just out of curiousity, what tables (and how) have they used to reduce £497 to £490?

Also, what is the difference between Total Gross and Taxable Gross? Mine always seem to be the same.

Rob on December 16th, 2014

Hi Rob,
Here are the tables for this year (PDF) : https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/276330/Tax_Tables_B-D_Manual__2014_.pdf
I have to admit, I thought that they only went to the level of £10, which is why I thought it might explain £98 tax rather than £99.40 (20% of £497) – but the tables do go to the nearest pound so I’m afraid I’m stumped.
Taxable Gross is different from Total Gross if anything has adjusted your taxable pay – the most common example being pension contributions. They count towards your gross pay (assuming you aren’t in a salary sacrifice scheme) but reduce your taxable pay.

admin on December 16th, 2014

Hello again,

Thank you for all your help so far. I’ve just had my december pay cheque through. I’ve been taxed again on this month, hopefully this would help work out how they are calculating my tax.

This one reads:

BASIC PAY PENSIONABLE 1495.00
Tax Paid 132.20
NI Contracted In 99.84

Cumulatives:
Total Gross 8658.00
Taxable Gross 8658.00
Tax Paid 230.20
Emplyees NI 561.60
Employers 645.86

Net Payment 1262.96

Any idea how they determine how much tax I pay?

Cheers,

Rob

Rob on December 22nd, 2014

Hi Rob,
I think this is the same as before – now you have earned £8658 over 9 months. In 9 months you’re entitled to earn 3/4 of the annual £10k allowance (i.e. £7,500) tax free. You need to pay tax at 20% on the extra £1,158 you’ve earned on top of that, or £231.60. Last month you paid £98, so this month it’s just £133.60. I suspect the difference of a pound here or there between these figures and those on your payslip are to do with the specific point in the pay period that you are being paid.
Next month, you’ll pay tax again in a similar fashion, and obviously how much you get paid will influence how much you pay. Normally employees on a salary have their tax spread throughout the year, so that each month the deductions are the same (or very nearly the same).

admin on December 23rd, 2014

Hi

I have two questions
1, I have a tax code of 1000L. I am earning 35k a year. How do I work out what my tax and NI should be? I am single and have no independents and not claiming any tax deductions

2, I am expecting a £14,000 bonus/retainer – what % tax will I pay on this?

Claire on January 15th, 2015

Hi Claire,
If you enter your details (tax code, salary etc) into The Salary Calculator, you should find that it calculates your tax and NI for you. If you also enter your bonus into the “Bonus” tab, it will show you what your bonus pay slip should look like.
Your basic salary means that you are paying tax at 20% (and NI at 12%), but your £14,000 bonus will push you over the threshold into 40% tax (and 2% NI). This means that the rate at which you pay tax on your bonus will not be uniform – some of it will be taxed more heavily than other bits. Sometimes, a bonus gets more heavily taxed than it should do, in which case the following month the extra tax is normally refunded.

admin on January 16th, 2015

Hi,

I have a basic salary of £40,800. During the financial year so far I have earned an extra £31,000 in bonuses. In addition, my final year end bonus (paid in March) will be £77,500 taking my annual earnings to around £149,300.

The calculator states that I may have an additional £4,314 tax deducted and then possibly returned the following month. Is there any way to tell from the information above if this will or won’t happen?

Many thanks for your help

Sxxxxx on January 22nd, 2015

Hi S,
Congratulations on your bonuses!
The first thing to say is that the calculator is not set up for multiple bonuses throughout the year, so its calculations in your situation may not match with your payslips. Your employer’s HR or payroll department will be able to answer this question better, but my experience of this is that the extra tax is taken because of the possibility that you might continue earning that much every month for the remainder of the tax year (and thus putting you over a tax threshold). As you might expect, this problem is more common at the start of the tax year than at the end (because of the greater impact of earning that much for the remainder of the year). Since your bonus is due in March, the last month of the tax year, it is less likely that this extra tax might be taken. In any case, you do get it back in subsequent months.
One thing just to be aware of, which might be a surprise, is that this latest bonus will take your annual income over £100,000. This means that your tax-free personal allowance (depends on your tax code, but the standard is £10,000) will be reduced, in your case to zero. Depending on what your tax code was for this year, and whether you do a tax return or not, you may find that extra tax is due (often this is applied by changing your tax code for next year). For more help with your specific situation, I would suggest speaking to a financial adviser or Citizens Advice.

admin on January 22nd, 2015

Hi,

I’ve achieved a bonus this year of 5k. My company has deducted 13.8% of this as a gross figure from my bonus due to their NI contribution, and I pay normal tax and NI on the remaining amount through my wages.

Are companies allowed to charge me for their own NI contribution? None of this was ever mentioned when bonuses where agreed.

Thanks for you help

Mark on January 26th, 2015

Hi Mark,

I’ve not heard of this before but that doesn’t mean it doesn’t happen. I would suggest two things: one is to check your contract, or other paperwork that outlines how bonuses are to be paid (employers are generally required to notify employees in writing of deductions to their pay); the other is to try the Citizens Advice Bureau and see what they are able to tell you.

admin on January 26th, 2015

Hi,

A couple of colleagues were awarded a £750 extra payment for extra work and advised this will have to be taxed and through my wages. however when I calculate it they only bring home £442 of that £750 because NI and PAYE leaps up. Have you any advice on how I can manage this? maybe make the payment separately and not as part of my wages? or will I get this extra tax i will have paid back?
thanks for any advice.

Emma on February 11th, 2015

Hi Emma,

This sounds like a rather unusual arrangement – your colleagues are getting a bonus payment, but it is going through your wages rather than their own? Bonus / overtime payments are subject to income tax and NI. As others who have commented have found, sometimes if you go over a tax threshold with your bonus you pay more tax one month, but get some of it back the following month. However, I’m afraid you’d have to speak to an accountant or an independent financial adviser for the best way to proceed.

admin on February 12th, 2015

Hi,

I am due to be paid a bonus on 20/03/15.

I have used the tax calculator and understand that I may be taxed at the higher level as my salary will be over the threshold for the month but not the year.

Can you please tell me if this is likely to happen with it being the final month in the current financial year and if it does can I expect a refund the next month or is it divided over the next tax year?

Many thanks in advance.

Elizabeth on March 6th, 2015

Hi Elizabeth,

It’s not likely to happen as your bonus will arrive in the last month of the tax year. If you do pay extra tax it is normally refunded in the following month, although in my experience some of the refund may not arrive until the month following that.

admin on March 7th, 2015

Hi,

I would like to undersand the amount of my tax paid of this month. My basic year salary is 37,934£ (+54.12£ benefit funding each months) and I have received in March a bonus of 7082£. Tax paid on my March payslip is 2798.00£ and NIC 476.29£. How can I check if it’s correct?

Thank you

L on March 16th, 2015

Hi L,

If you go to the Salary Calculator and enter all your details (salary, bonus, tax code and so on), it will show you a breakdown of a normal pay period and the one with your bonus in it. This should help you check to see if it is correct – if there is anything about the deductions on your payslip that you don’t understand, your employer’s payroll department should be able to explain.

admin on March 17th, 2015

Hi,

I have a new job role with my employer which has moved my Salary to £35,000 and a company car. I am also due a bonus of £625 in April due to achievements in my previous role for Q1.

If I get this bonus payment in April my assumed salary for the year will be £42,500. However I will not be due this bonus again as it is not relevant to my new role.

The payments on the company car and fuel are more than double once the 40% tax bracket is breached, do the tax codes fluctuate based on the earnings in the current month or will I be on the company car tax code based on me earning at 40%. As I am so close to the 40% threshold even delaying my bonus payment to May should keep me away from any annualised 40% tax issues – will this help?

Any help on this is appreciated.

Anthony on April 7th, 2015

Hi Anthony,

The short answer, I’m afraid, is I’m not sure – I don’t have any experience with company car deductions. Having said that, tax codes are not normally changed for bonuses or pay rises – it is only when your circumstances (such as your taxable benefits) change. The cost of a taxable benefit goes up when you are a higher rate tax payer simply because the tax rate is higher and the reduction in personal allowance due to your tax code has a greater effect on your take-home pay. For example, if someone’s annual personal allowance is reduced by £1,000 for their company car, this costs a 40% tax payer £400 but someone in the 20% tax bracket would only be £200 worse off. This is the price you pay for being well paid – the equivalent is true if you were to get a £1,000 bonus – the higher rate tax payer would get to keep less of it.

What I’m getting round to saying is that, as you have already worked out, you are likely to pay more tax than you need to in April, not because your tax code will change but because it will look like you are going to earn more for the year than you actually will. However, in my experience this is corrected in subsequent months (normally just the following month), so that by the end of the tax year you will have paid the right tax for someone earning £35,625. If you enter the details of your salary, bonus and tax code into the Salary Calculator, it will estimate the amount of extra tax you might pay this month (the actual amount can vary depending on when in the tax year you receive your bonus).

admin on April 7th, 2015

i have just found out I’m getting a bonus in my next wage packet of £300.00 if I don’t earn enough to pay tax will they still deduct it from this payment

Tina Willson on April 11th, 2015

Hi Tina,
Since tax thresholds get spread out over the year, it is possible that your next wage packet will go over the tax-free amount once you include your bonus. If so, some tax will be deducted from your bonus – however, if your earnings are still going to be below the tax threshold for the year you will normally get this tax refunded back in subsequent payslips.

admin on April 11th, 2015

My monthly wage is 1400 and I will receive £1000 bonus this month with my salary.My national insurance and tax will come out from the above figure.How much do I actually receive?

rika9910 on April 30th, 2015

Hi Rika,

If you enter the details of your salary and bonus into the Salary Calculator, it should show you how much you can expect to receive in your bonus pay. However, as other people have found (especially as we are at the start of the tax year), you might find that you pay more tax than you expect. The calculator will try to estimate this for you. If you do pay more tax, it is normally refunded in subsequent payslips.

admin on May 1st, 2015

hi!
I have a salary of 58000/year.
every month In get bonus of 500-600 pounds.
how is the tax on bonus calculated?

thank you

dan on May 6th, 2015

Hi Dan,
The tax on your bonus is calculated the same whether you earn it every month or just once a year (although the numbers used in the calculations by your employer will be slightly different). To see how your payslip will look for a particular month, enter your details (including that month’s bonus) in to the Salary Calculator. For the current tax year, your income takes you over the threshold for 40% tax so your bonuses will have tax deducted at 40%, and National Insurance at 2%.

admin on May 10th, 2015

Hi
my annual salary is £30900 i received a bonus payment this mnoth of £3000 but i seem to have been highly taxed will this over tax be paid back next month?
Thanks

Molly on April 29th, 2016

Hi Molly,
Yes, bonuses often get highly taxed (especially at the start of the tax year, April) because they effectively tax you as though you are going to get the bonus every month of the year. You should get this back over the next month or so (it can take a while depending on how much tax you’ve paid).

admin on April 29th, 2016

Quick query please?

I have been heavily taxed on a bumper annual bonus, does this re-adjust each month after the end of financial year tax period ? for example I usually pay around £700 tax per month, with bonus I paid nearly £4000 in June, my salary will now kick back to normal….do the HMRC automatically then assume that the tax reduction was a “one off” and therefore less tax is taken off over the next 10 months or so as payback ? Thank you in advance J

John Stewart on July 8th, 2016

Hi John,
Yes, your employer will correct the extra tax you have paid in subsequent payslips. If you put your details into The Salary Calculator using the bonus field, it will work out how much tax should be due on the bonus, and will estimate how much extra you may have been charged (this varies throughout the year, though, so it is just an estimate). In my experience the correction of tax happens fully in the following month, if your bonus was particularly enormous it might, I suppose, take a little longer to fully correct. Your payroll or HR department will probably be able to give you a more definitive answer, though, as they have probably seen this before.

admin on July 8th, 2016

Hi I’m expecting amazing commission this month do hitting target that month and quarterly

Basic salary 2000
Commission 2500+5490= 7990
Total – 9990

Will I get hit by a massive txt and ni bill my commission is totally different each month but it’s never been this high ??

Lisa on July 28th, 2016

Hi Lisa,
Congratulations on your commission this month! The short answer is yes, you will pay quite a lot of tax on it. If you enter your details into the Salary Calculator (click on the “Bonus” tab and enter 7990), it will work out how much you should pay – and it will also try to work out how much extra you might be charged (this appears in a blue box underneath the results). Because your commission is different each month, both of these values will be estimates but should hopefully give you an idea – and I should also say that the number in the blue box is a worst-case scenario, I would not expect it to be as bad as that because we are some way into the tax year (it is worse near the start of the tax year).

If you do have extra tax deducted this month, don’t despair – it will work itself out in following months and you will get it back (normally in the next month, if your pay goes back to more normal levels). Your HR or Payroll department will hopefully be able to explain if you have any questions when your payslip comes through. I hope this helps!

admin on July 28th, 2016

Hi
I was supposed to get a pay rise last month of £300 but this did not come through, mistake at payroll. This will be rectified for next month but means I will get the extra £300 from last month added to this month so £600. Will I be taxed more as a result or will it rectify itself over time?

Chris on September 25th, 2016

Hi Chris,
You might pay a little more tax than you need to in your next pay packet (the one with £600 in), but if you do, it will be rectified in time (normally in the following month).

admin on September 26th, 2016

Hi I have a basic salary of £25.5k I will be getting a one of bonus of £1000k how will I be taxed on this? I’m on student loan plan 1 and childcare vouchers of £243 when filling in the former and adding the bonus it works out that because of the tax my net salary would actually be £200 less than it normally would. Is this right?

Many thanks

Rachael on October 5th, 2016

Hi Rachael,

If I put the numbers you gave me in to the calculator, it tells me that your normal take-home is £1,505 per month, and when you get your bonus it will be £2,095 – so no, your net salary won’t be lower. In your situation, you will have simple deductions off your bonus – 20% Income Tax, 12% NI, 9% Student Loan, a total of 41%. This means you’ll get to keep 59%, or £590. (It is not always this simple – this is just because in your case the bonus doesn’t take you over any thresholds). As others have found, your employer might take a little more tax than necessary this month, but it will be corrected in subsequent months.

I don’t know why you’re seeing a result suggesting your take-home pay would be lower than normal – does the “Normal Period” column match with what you normally take home? If not, there might be something else at work, like a tax code or possibly pension contributions. You would need to put this into the calculator too, to make sure the results match up.

I hope this helps!

admin on October 6th, 2016

Hi, my annual salary is £28k,and I am due to be paid an annual bonus of £17.5k at the end of December. As this will take my overall income above the £43k threshold, will I be taxed at the higher level of 40% on all of my income for the year, or just what I earn above £43k? Also as I will be paid the bonus in December and the end of the tax year is April, does that mean my monthly pay at the end of the tax year will be taxed at 40%,or will I get a letter from HMRC seeking payment of underpaid tax?

Many thanks

Lee

Lee on October 28th, 2016

Hi Lee,
Congratulations on your bonus! Tax is due at 40% only on your earnings above the £43k threshold, not on your entire earnings (just as 20% tax is only due on what you earn over your tax-free personal allowance). The 20% and 40% bands get divided equally throughout the year (so one twelfth per month, if you are paid monthly), so that you don’t get taxed more heavily at the end of the tax year.
Your employer should calculate the tax due on your bonus and deduct it from your pay as normal. Because this is a large bonus and it isn’t at the end of the tax year, it is likely that they will, in fact, deduct more tax than will eventually be due – but don’t worry, any overpaid tax from December will be refunded in subsequent payslips and by the end of the tax year you should have paid the right amount.
If you are still unsure your employer’s HR or Payroll department should be able to help.
Enter your details and your bonus into The Salary Calculator to see what your bonus take-home should look like (and also an estimate of the extra tax you might temporarily get charged – although this is a rough estimate because it depends when in the year you get your bonus).

admin on October 28th, 2016

Hello,

My contracted salary for the year was £48K. In the final month I received a bonus and so on my P60 I showed £51K total income after tax. I have child benefit and as it has a threshold of £50K in understand that I will have to pay back tax. But will the tax owed be calculated on the whole where 11 months out of 12 I was on £48K or just on the final month. Thanks

SB on October 25th, 2017

Hi SB,

As the Salary Calculator doesn’t calculate the Child Benefit Tax Charge, I’m not certain exactly of the answer. However, I believe it is based on your total income for the year, including your bonus. The critical amount, though, is your “adjusted net income”, which might be lower than £50,000. There is more information and a calculator available on Gov.uk.

admin on October 25th, 2017

Hi

I receive an annual income of 27000 on 1100L tax code.

From my previous job, I was due a referral bonus of £1500 which they are paying me as a one off on their payroll.

Will I be taxed for this and if so how will it work with two separate employers, one of whom is only paying me this referral bonus.

I am utterly confused and not sure if I deal with the HMRC later or if it will be taxed upon being paid through payroll.

Thanks

Ren on November 20th, 2017

Hi Ren,
I’m afraid I don’t know the full answer to your question. Tax will be due on your bonus, of course, and if they put it through their payroll your old employer will deduct the tax according to what they’ve been told to do by HMRC. I’m not sure whether the correct tax will be deducted, though, so it might be that HMRC will then have to tell your current employer to deduct more tax from your pay to make up for it – in an extreme case, this might not happen until the new tax year.
If I were in your situation, I would wait until the payment had been made and I had received a payslip from my old employer for the bonus payment (this will explain the deductions that have been made), then call HMRC to see if they can tell me if further tax is due.

admin on November 20th, 2017

If my salary has included a slightly variable but significant bonus every month for the past eighteen years that I’ve worked for a company, does that become part of my salary? My employer is suddenly changing the way they reward and tell me I shouldn’t have budgeted my living above my basic salary, and that the bonus scheme has got out of hand! They reviewed and refreshed it only a year ago, but have been suddenly making it an impossible bar to jump.

Dan on February 8th, 2018

Hi Dan,
This is another question I unfortunately don’t know the answer to, and it probably depends on your contract of employment. I think the best place for you to go would be Citizens Advice – this page on Employment Contracts might be useful, or there is plenty of other information on their website. If that doesn’t help, a conversation with your local Citizens Advice office will hopefully get you the answer you need.

admin on February 8th, 2018

Hello

I turned 65 on March 20 so no longer pay employee NIC
I was awarded a bonus in March and my pay hit my bank account on March 29. My question is “is my bonus subject to employee NIC” as I received it after my 65th birthday? Thanks

Alex Patrick on March 29th, 2018

Hi Alex,
I’m sorry, I don’t know the answer to that question. It may depend on when you earned the bonus (e.g. if it were for work you did in February). If your employer’s Payroll or HR department aren’t able to tell you, I suggest contacting HMRC and discussing your specific situation with them.

admin on March 29th, 2018

Hi. I hope you can help me. I earn £25000 pa. This month for the first month this tax year I am claiming overtime of £479.00 but I think I have been taxed 40% on it. Is that right and if not will I get a tax rebate?
Many thanks for your help

Helen Brooker on August 23rd, 2018

Hello
My annual salary is £30000 My monthly COS Salary is 2500 and Net Pay is 1981.92
i received a bonus payment this month of £333 pounds!
Deductions amount is:
PAYE Tax 369.00
National insurance 255.00
Advanced 220.00
In result I received 1988.28 Net pay, that means that my bonus is 6.36 pounds? Where is my 333p bonus disappeared then?
Thanks.

Tom on August 24th, 2018

Hi Helen,
From what you’ve told me, I don’t think you have earned enough this month, even with overtime, to be charged 40% tax. This does sometimes happen, especially near the start of the tax year – because if you earned that much every month of the year you would be in the 40% bracket. However, I don’t think this is the case for you. If you are looking at how much extra you are taking home this month, don’t forget that as well as 20% tax, there is also 12% National Insurance, making a total of 32% deducted from the £479. And if you contribute to a pension, there may be a further deduction for that, too. If that doesn’t explain it, please let me know your tax code and the exact figures that have been deducted and I’ll see if I can make sense of it. Your employer’s HR or payroll department may also be able to explain.
To answer your second question, yes – in those cases where a bonus or overtime pushes you temporarily into a higher tax bracket, when your pay returns to normal the following month then your tax deduction for that month will be reduced accordingly.

admin on August 24th, 2018

Hi Tom,
Congratulations on your bonus! I think the key is in that extra deduction, “Advanced 220.00”. With just the Tax and National Insurance deductions, your take home would have been £2,208.18, which would be a nice increase on your usual take home. However, this £220 further deduction reduces it to £1,988.18. I don’t know what this extra deduction is, my guess based on “Advanced” is that your employer previously paid you £220 as an advance, possibly of this bonus. If you don’t know what this deduction is about, I suggest you ask your employer to explain it to you.

admin on August 24th, 2018

Hi

I have received commission this month of £5175.85 and my basic is £48k so the total pre tax is Total £9175.85.

I have had the following deductions:-

Tax £2609.60
Pension £160
NI ££513.94
Student Loan £445

Your calculator suggests the tax should have £1,846.01 , I am just wondering if I have been overtaxed by £750 which obviously is quite a lot? Thanks in advance!

Sara H on May 7th, 2019

Hi Sara,
When you get a bonus or commission at the start of the tax year, as you have done, HMRC requires employers to calculate the tax due as though the employee were earning that much for the rest of the year, too. This means that more tax gets deducted than will ultimately be due. The good news is that you will get a refund of any overpaid tax – normally this is in your next payslip, sometimes it takes a further pay period to get totally back to normal. If you get a bonus towards the end of the tax year, the effect is less pronounced. If you earn further commission in following months, of course, your tax will be worked out taking that into account.
If you enter your details into the calculator, you should see a message above the results explaining this extra tax.

admin on May 7th, 2019

Hi

I am due to get a 4% bonus in July. I do intend to take a week unpaid parental leave so I just wondered how I would calculate that. Would I just deduct what I would lose for a weeks pay from my bonus in your calculator?

Thank you for your advice.

Sam on May 11th, 2019

Hi Sam,
Unfortunately, the calculator is not really set up for things like unpaid leave, because it involves changing the amount you earn from payslip to payslip and the calculator is only designed for stable incomes.
Having said that, subtracting the amount you’ll lose for your time off from your bonus should give you a pretty good estimate of how your payslip will be affected. I hope this helps!

admin on May 12th, 2019

Hi There,
I will be leaving the UK in October and would have paid only 6 months of my annual salary.
I will not be earning for the next 6 months however my company are paying me a bonus end of September and wanted to be clear on how they would calculate it.

My Annual Salary is £48,334
I will be getting an exit bonus of £4k
so by the time I leave I would have only been paid £24,166.98 + £4k = £28,166.98
I have been paying 40% tax on a proportion of earnings YTD so wanted to understand how my last pay slip will be calculated – will it be at 40% or can my company adjust based on projection of finishing year on earnings below threshold

Ben on August 17th, 2019

Hi Ben,
Sorry it took me a long time to reply! I don’t know about your situation when you are leaving the country. My experience is that your employer won’t have the option – they will have to tax you quite heavily (i.e. at 40%) when you get your bonus. However, you should be due a refund of any overpaid tax. Unfortunately I don’t know whether you can expect to get this in subsequent months, when it becomes apparent you’re no longer earning, or if you will have to wait until the end of the tax year. If your employer’s payroll or HR department can’t help, you can try contacting HMRC.

admin on September 10th, 2019

Hi,

My salary is £30000/year.
Throughout the year I have accumulated bonuses of £2000. At the end of the year I have been offered a bonus of £2000.
Can I ask how much tax I have to pay for the £2000 bonus and how much tax the company pays for this?
So overall how much does the business pay and how much goes in my pocket.

Thanks,
Michelle

Michelle on November 29th, 2019

Hi Michelle,
All of the tax on your bonus will be paid by you, although usually your employer will deduct this and send it to HMRC just as they do with your normal payslips. Your employer will also pay HMRC employer’s NI contributions but this doesn’t come out of your pocket.
If you enter your details into the Salary Calculator, including putting the bonus in the bonus tab, the calculator will estimate the tax on the bonus for you. It’s not clear from your comment whether your total bonus is £2,000 or if it is an extra £2,000 on top of £2,000 already paid. If it is the latter, put a salary of £32,000 into the calculator rather than £30,000.
The bonus tax will be estimated – it is likely that you will pay a little more because the tax year doesn’t finish until 6th April. However, in your following payslip (assuming you don’t get any further bonuses), you will get back any extra tax you have paid.

admin on November 29th, 2019

Hi
I am on MAT leave and have been given my annual bonus would I usually be taxed on this based on previous salary over my current MAT leave contributions?

Laura on January 31st, 2020

Hi Laura,

I can’t give you an easy answer to this I’m afraid. You’ll pay tax on your bonus based on how much you have been paid (normal salary and then MAT pay) so far this tax year (i.e. since April). How much you have been paid will obviously depend on when you went on to MAT pay, whether your employer gives you any additional MAT pay or just the statutory, and what your salary was to begin with. I would suggest using the calculator with your normal full salary, and then (assuming that you’ve been paid less since you went on MAT leave) the tax you actually pay should be less than what the calculator estimates.

admin on February 4th, 2020

Hi,
My annual bonus is paid in April so is always in the 1st month (not sure if blessing or curse!) and will be £8,339. I achieved a promotion which put my basic to 66,500 and wondered whether your calculator is correct if I increase my pension contribution to reduce my tax?

I intend to sacrifice 40% of my basic (I can’t do a bonus sacrifice) via our employer scheme so wondered whether it’s true that I’ll see more in my net as a consequence? I usually sacrifice 15%.

Other online calculators don’t appear to offer the same ease or accuracy as yours but I’m hoping the above is true!

Thanks!

Tom on April 6th, 2020

Hi Tom,
Congratulations on your bonus (and promotion)!
Unfortunately, I’m afraid this magic increase in take-home despite increased pension contributions isn’t real. Assuming that you are comparing the calculator’s results with 15% pension and 40% pension, the reason you’re seeing an apparent increase in take-home for your bonus month is that the calculator works out the tax for the whole year based on the options you enter. i.e., it is based on you contributing 40% of your basic pay every month rather than (as I think you are intending on doing) just in the bonus month and then going back to 15%. If you contributed 40% to your pension every month, this would take your taxable income out of the higher rate band, so much so that all of your bonus would be taxed at 20% rather than 40%. This is why it looks like your take home is higher.
The calculator doesn’t have a way to work out the deductions if you vary your pension contribution (or anything else) throughout the year, I’m afraid. However, by coincidence, if you enter 15% pension contribution and tick the “Include bonus” option (this means that 15% of your bonus gets included in the calculations), the amount the calculator will show being contributed to your pension in your bonus month is approximately 37.5% of your monthly basic pay. So if you try this, it will give you a reasonable estimate of the effect of such a contribution.
I hope this helps!

admin on April 6th, 2020

Hi,

I’m due to receive a bonus of around 8k this month however due to the covid-19 situation my employer is asking me if I wouldn’t mind having the bonus paid in 3 installments over the next 6 months instead of getting it all at the end of this month.
I would receive 1/3 at the end of this month, 1/3 in July and 1/3 in October.

Will I have to pay more or less taxes if I agree to the 6 months installments? Or will I pay the same amount regardless?

Thank you,
Tina

Tina on April 16th, 2020

Hi,

Are bonus taxed in the same way as basic pay?

Thank you,
Tom

Tom on April 17th, 2020

Hi Tina,
Congratulations on your bonus! The answer is, it depends on how much your normal salary is. In terms of income tax, in the long term it doesn’t matter whether you take the bonus in one payment or in three – the amount of tax due is calculated for the year as a whole, it doesn’t matter when your bonus gets paid. However, the calculations are done on a month-by-month basis, meaning that if you get a bonus and it looks like you’ll earn a lot this year you’ll pay more tax that month than you really should. The following month, when your pay goes back to normal, you get a refund of the overpaid tax. So in the long run it’s the same but if you take one big bonus in April (the start of the tax year) you’ll pay a lot of tax on it in April but get it back in May. If you take the 3 smaller bonuses the extra tax taken and then refunded each time will be smaller. But on the other hand, you’ll be waiting until October to get all of your money. I hope that makes sense.
One thing which is different is National Insurance – it is worked out for each pay period, in your case, each month. Because the NI rate goes down as your pay goes up (unlike tax rates, which increase) it could potentially be beneficial to take all of the bonus in one pay period rather than in 3. If you already earn over the Upper NI threshold (£50,000 this tax year) then it will make no difference, you’ll pay the same NI no matter what. But if you earn below that threshold, you would pay more NI if you take the bonus in 3 installments. How much more depends on what your other earnings are – I estimate that for someone on £30,000 before the bonus, the extra NI for taking 3 installments would be about £333. The closer to £50,000 you earn before bonus, the smaller this difference would make.
But there are other things which might affect it too – if you pay into a pension, are bonuses included in pensionable pay? Is your pension contribution based on “Qualifying Earnings” or your whole salary? I’m afraid I can’t give you a straightforward answer. If you enter your details in The Salary Calculator, compare the difference in take-home pay between a bonus month with an £8000 bonus and with a bonus 1/3 of that (although remember that you’ll get that 3 times, whereas with the one large bonus you’ll get just one, plus additional “normal” months).
I hope that helps!

admin on April 17th, 2020

Hi Tom,
Yes they are, although if you read the other comments on this page you’ll see that sometimes the results can be a little unexpected.

admin on April 17th, 2020

Hi,

Back in December I received a Bonus payment of £1250, in a standard month I earn £1838 (gross after pension deduction) and usually pay Tax=£159 and NI=£134 (£125 since 1st April) however in December I paid Tax=£419 NI=£290 this seemed to be high in relation to my normal salary and the size of the bonus.

I expected to receive a back payment the following month when payments returned to normal but I haven’t had anything yet, is this correct?

Many Thanks

Leann

Leann on June 20th, 2020

Hi Leann,

Without all the details of your pension and other deductions I can’t check completely accurately, but I’m afraid I think those deductions are correct. You are a 20% tax payer, and you paid an additional £250 tax, which is what would be expected from a £1,250 bonus. If you enter your details, including the bonus, into The Salary Calculator you will see its calculations. The column for “Bonus Period” will have the values that you should pay. If it thinks you might be charged more than that, it will put a message above the results. n.b. Any overpayment and subsequent refund would be of income tax only – NI is calculated per pay period and us therefore not “overpaid”. I know this isn’t the answer you were hoping for, but I hope it helps!

admin on June 22nd, 2020

Hi,

My salary is £30000/year.
I get qaurterly bonuses and I smashed my target last quarter and I will be getting £9086.32 commission.

To give more information, in the first quarter (Jan-March) the payout is at the end of May. In the second quarter (April-July) the payout is at the end of August and so on…I started my job in March and in the second quarter (April-July) I smashed my target and received £9086.32 as stated above. I’m repaying student loan (plan 2) and my tax code is 1244L. I pay 3% towards my pension.

I’ve looked on other tax calculators online and it says I will take home just over £6000 but on your website is says i’ll take more?

How much will I take home in August?

Many thanks
Adrian

Adrian on July 23rd, 2020

Hi Adrian,
Congratulations on your bonus!
There are a couple of things going on here, which show how complicated working this out can be. Firstly, when your employer works out the tax to deduct, they base this not only on what you have earned in that month but also on what you have earned so far in that tax year – and broadly speaking, your tax is worked out as though you were to earn that month’s income every month for the rest of the year. What this means is that depending on when in the tax year you get your bonus, you might pay a different amount of tax in that payslip. However, if your pay goes back down to normal the following month, if you have overpaid tax you will normally get it refunded. The best case is if you get your bonus in March, at the end of the tax year, and your tax is worked out with no refund due. The worst case is if you get the bonus in April, and the tax is worked out as though you were getting that bonus every month of the year – in which case, a lot more tax is due.
I don’t know about the other calculators you have used, but The Salary Calculator shows you the results for the “best case” above, because, by the end of the tax year any overpaid tax will have been refunded and that’s what your total takehome will be. However, knowing that you might (temporarily) have more tax deducted, it also displays a message saying that more tax might be deducted, and it estimates this based on the “worst case”. In your example, the message says:

You might find that about an extra £1,507.60 of income tax than indicated is actually deducted from your bonus payslip.

Your bonus is due in August, about a third of the way through the tax year, so it is likely you will have extra tax deducted but not quite as much as that. And, as I said above, in future months any overpaid tax will be refunded.
The second thing going on is that if you were indeed getting this bonus every month(!) your income for the year would be £139,032, and your tax-free personal allowance would be reduced from £12,440 to £0 – meaning that you would pay even more tax. It is possible that these other calculators are applying this reduction, but I think it is unlikely to happen because of your tax code and because your bonus comes later in the year.
I hope this helps!

admin on July 23rd, 2020

Hi,

In June I had a salary increase to 37.5k (3125 monthly) and also a 5k bonus in the same month.
Student loan deduction was 585.
NI 484
EE Pension 145.88
Total take home was 5285.56.
I have obviously been taxed higher due to the Bonus taking me over the threshold.

This month my take home was 2397.
student loan- 135
EE-104.

Should I have expected a higher take home this month due to tax adjustments? Or will these be drip fed through future payslips?
Doe

Lewis on August 4th, 2020

Hi Lewis,
Based on the details you’ve provided, the calculator thinks that your “normal” (i.e. no bonus, no tax refund) take-home should be £2,210 per month. Getting £2,397 suggests that you are being refunded £187 in tax.
If no extra tax were taken due to you being over the tax threshold in June, the calculator believes that your take home should have been £5,554, so the £5,285 you received suggests that you overpaid about £269 in tax.
So, given your £187 refund in July, it looks as though you have still overpaid £82 in tax. Please note that I’ve had to make a few assumptions to work this out, around your tax code and other deductions, so it might not be accurate. The calculator doesn’t do month-by-month calculations like those done by HMRC so I can’t actually check whether you should have received all of your refund in July or not. However, I can tell you that in my experience, it does sometimes take more than one month for the tax adjustments to filter through. June is only the third month of the tax year so it’s quite likely to happen in this case. I’ve never seen it take more than two further payslips to complete the adjustment (i.e. the August payslip should complete the adjustment), although I suppose that technically it is possible.

admin on August 5th, 2020

Hi, hoping you can help. I have to take a pay cut but my company is offering buy down of the money I am loosing, either a lump sum payment or paid in equal installments monthly for 24 months. My new salary is £50k and the buy down is £25k. Which option would be better to take and not incur too much tax. The lump sum payment would be made end of Dec. Thank you.

Jane on November 8th, 2020

Hi Jane,
I’m afraid I’m not in a position to answer that question, I’m sure there is a lot to consider quite apart from the income tax and I don’t know what the impact of all of this would be. My suggestion would be to find an independent financial advisor and go through the details with them. There might be a fee involved for such advice but you should then have confidence in the value of the advice you receive.
Sorry I can’t help more!

admin on November 9th, 2020

Hi, Like many people I get an annual bonus and pay lots of extra tax and NI in the month I get the bonus. HMRC have now forecasted my earnings and tax due through PAYE next year and added my bonus amount to my base salary for tax purposes. I think this is wrong. I think for 11 months of the year I pay tax on my base pay minus car benefit in usual way and then in the month I receive bonus they take the additional tax then. Not be hit twice in effect as I can’t forecast bonus or pay twice?

Nico on February 10th, 2021

Hi Nico, sorry for the delayed response to your query. You definitely won’t get
hit twice – over the year the total tax deducted will be the same. However,
you might pay more of it up front than you previously have. Money
Saving Expert have a good article about why your tax code might be different
(assuming this is how your tax has been adjusted), and what to do if you
think it is wrong –
https://www.moneysavingexpert.com/family/check-tax-code/
I hope this helps!

Editor on May 17th, 2021

I added my bonus ( to be paid in Oct) to my estimated income on my hmrc account. This meant that this month my tax code changed and an additional £800 was taken.

Does this mean that each month my tax will be the same, so when my bonus gets paid i won’t pay tax on it all.

The additional £800 works out too 40% of the bonus, so roughly the additional tax over the year.

Thanks

Clare on June 1st, 2021

Hi Clare, thank you for your comment. When you added your bonus to your HMRC account did you add it onto your annual salary or as a stand-alone bonus. You could use thesalarycalculator.co.uk where there is a ‘bonus’ option which may give you a clearer answer. Your bonus shouldn’t affect your taxable income in a way that makes the bonus effectively redundant! I hope this helps.

Editor on June 4th, 2021

Hi there, is there a difference in tax and ni paid on a 1 off bonus payment if it is a contractual bonus or an unexpected bonus?

Laura on August 18th, 2021

Hi Laura, thank you for your comment. There is no difference in tax or NI depending on what type of bonus you receive, as far as HMRC is concerned it is no different to regular pay. I hope this helps!

Editor on August 21st, 2021

I have a bonus this month. My tax code is 42T. I pay 3% contribution to my pension. My annual salary is £25,872 paid monthly. My bonus this month is £2700. Total gross pay this month is therefore £4,856.
I have paid £964 PAYE. Salary calculator says that should be around £935. Interestingly, if i take the pension contribution out of the salary calculator the PAYE is correct at £964?

Tony Mitchell on August 23rd, 2021

Hi,

I am expecting 2 different bonus of total around 7K in same month. My gross salary is around 43000.
Is it better to ask employee to pay bonuses in different months so i am taxed on lower rate, or it does not matter ?

Neeraj on May 24th, 2023

Hi Neeraj,
In the long run, it doesn’t matter for tax, and you’ll actually be better off for NI to take one large bonus. You will be taxed at a higher rate in the month that you get your bonuses but in following months you be taxed at a lower rate to cancel it out. This is likely to happen even if you split your bonus into different months, because £43k plus £7k takes you very close to the higher rate threshold. However, National Insurance is calculated month-to-month and if you earn a lot in one month you pay a lower rate – so you will pay less NI if you take your bonuses together. I hope this helps!

Admin on May 25th, 2023

Hi,

My tax code for 23/24 changed to 722L after I apparently have underpaid in a previous year.

I receive a quarterly bonus, my last quarterly bonus plus salary before deductions (in March 2022) totalled £7196 of which tax was £1449. This was with my old tax code.

With this new tax code my quarterly bonus is due ths month, plus salary at £7328, however my tax is now approx £500 higher, at £2097.

My annual estimated income with my bonus’ is approx £75k.

I don’t understand why I’m paying so much more in tax this month on this bonus?

J on June 22nd, 2023

Hi J,
You didn’t say what your tax code was before the change, but assuming it was 1257L then I’ve worked out you should pay £178 more per month just because of your tax code change. Also, your income is higher this month than in March (presumably a bigger a bonus), which should mean about another £52 in tax. I can’t explain the rest of the difference. However, £1449 tax is low for income of £7196 back in March – I work it out, even with 1257L tax code, to be £1831. So the question seems to be not why you’re paying so much tax now, but why you paid so little tax back then?

Admin on June 23rd, 2023

been offered a new job at a different company but my current company has improved the package that i am on. unsure what to do as i think there is not a lot in it between them both

current role
Annual salary £52,010.40
Bonus (10%) 1 x £5,200 (pretty much guaranteed)
pension salary sacrifice matched 8%
current tax code is 1383M but i think i will move into a new tax bracket due to increased earnings

I think I would come out with £3,067.13 after deductions per month.
but in December when my bonus is paid for the month my pay will be £7,593.11 plus 2k in shares annually which can been traded in after 3 years. (next year my first lot of shares are available to sell if I wished

New role
basic salary is 55k
car allowance £5,700 per annum
bonus last few years has been 2% of my annual salary
pension assuming 8% salary sacrifice.
i think this would work out as £3,464.12 after deductions

the new role monthly pay is better but i think my current role is still better financially after bonus and shares are taken into consideration.

can anyone help check my math’s please . before I have to make the decision

Gary s on June 29th, 2023

Hi Gary,
I’ve put these figures into the Compare Two Salaries calculator and they pretty much match yours (I get £3,517 per month for the second role). It suggests that even considering the bonus, you would be roughly £2,300 per year better off in the second role – although this doesn’t factor in the shares, which obviously will depend on the value of the shares when you sell them. It would be worth considering the pension contributions, though – you say that in the first job the 8% is matched, which is quite rare in my experience. If your employer is paying that 8% into your pension that’s another £4,000 per year – if the second employer doesn’t match contributions as high as 8% then it could make the difference.
I hope this helps!

Admin on June 29th, 2023

I get paid monthly and Jan 2024 I received a bonus prior to receiving my salary for that month.

I received, in my bank £1137.

Jan salary came in and I thought it would be the same as a standard month but it’s around £300 less than usual.

Looking at my payslip, the bonus was just shy of £1500.

They have then deducted my standard tax, plus tax again for the bonus…

So essentially I only received around £800 of a £1500 bonus… does that sound correct?

Thanks!

Emma on February 1st, 2024

Hi Emma,
Bonus income is taxed the same as your salary, but the amount you pay is worked out each pay period. If your bonus takes you into a higher rate tax band for that month, you’ll pay the higher rate of tax. If this was a blip and your total income for the year is below the annual threshold for the higher rate of tax, later payslips will refund this tax to you (or rather, you’ll pay less tax on the income in subsequent months). Enter your bonus in the Salary Calculator along with the rest of your details and you will see an estimate of the tax due – as well as a message about possible extra tax that might be taken in the bonus month.
If your income is above (or close to) the threshold for 40% tax, currently £50,270, then your bonus will indeed be taxed at 40%. There would also be National Insurance and possibly Student Loan etc to be deducted as well, so receiving £800 of a £1500 bonus is not impossible. But as I say, if you’ve paid more tax than you should overall your later payslips will correct it assuming your pay goes back to normal.

Admin on February 26th, 2024

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