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.

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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.

98 Comments to Bonus payments added!

  1. 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

  2. kim southgate on April 5th, 2011
  3. 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

  4. admin on April 5th, 2011
  5. 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.

  6. Mike on June 13th, 2011
  7. 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!

  8. admin on June 13th, 2011
  9. 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.

  10. Ilko Dimov on August 3rd, 2012
  11. 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.

  12. admin on August 6th, 2012
  13. 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

  14. Suzy on September 23rd, 2012
  15. 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!

  16. admin on September 24th, 2012
  17. 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

  18. Will on October 6th, 2012
  19. 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!

  20. admin on October 8th, 2012
  21. 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

  22. Emma Jones on January 7th, 2013
  23. 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!

  24. admin on January 7th, 2013
  25. 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?

  26. Patricia on January 23rd, 2013
  27. 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.

  28. admin on January 23rd, 2013
  29. 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?

  30. RachieB9 on February 7th, 2013
  31. 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!

  32. admin on February 7th, 2013
  33. 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.

  34. Chrissy on February 15th, 2013
  35. 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.

  36. admin on February 15th, 2013
  37. 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

  38. josephine on March 5th, 2013
  39. 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.

  40. admin on March 6th, 2013
  41. 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 .

  42. Sheeraz on March 7th, 2013
  43. 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.

  44. admin on March 7th, 2013
  45. 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.

  46. Sheeraz on March 8th, 2013
  47. 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

  48. Gemma on March 21st, 2013
  49. 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.

  50. admin on March 21st, 2013
  51. 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

  52. Robert Thomson on April 1st, 2013
  53. 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.

  54. admin on April 2nd, 2013
  55. 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!

  56. Jimmy Jimmy on May 2nd, 2013
  57. Arrgh pasted the wrong net pay, I didn’t get ripped off that badly! :)

    Net Pay 3,205.83

  58. Jimmy Jimmy on May 2nd, 2013
  59. 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.

  60. admin on May 3rd, 2013
  61. 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 ;)

  62. Jimmy Jimmy on May 3rd, 2013
  63. 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!

  64. admin on May 3rd, 2013
  65. 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.

  66. Steve on May 5th, 2013
  67. 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!

  68. admin on May 5th, 2013
  69. 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

  70. Georgina on May 20th, 2013
  71. 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.

  72. admin on May 20th, 2013
  73. 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

  74. Chloe on July 8th, 2013
  75. 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!

  76. admin on July 8th, 2013
  77. 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

  78. Liam on July 18th, 2013
  79. 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!

  80. admin on July 19th, 2013
  81. 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

  82. samtell on August 19th, 2013
  83. 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!

  84. admin on August 19th, 2013
  85. 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

  86. Rebecca on August 27th, 2013
  87. 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.

  88. admin on August 27th, 2013
  89. 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 :)

  90. Ash on September 19th, 2013
  91. 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!

  92. admin on September 21st, 2013
  93. 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

  94. Rob on November 13th, 2013
  95. 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!

  96. admin on November 14th, 2013
  97. 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.

  98. Sue on December 4th, 2013
  99. Sorry I actually work 20 per week not 24 – it just feels like it !!!! LOL!

  100. Sue on December 4th, 2013
  101. 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!

  102. admin on December 4th, 2013
  103. Can you tell me what PayPlus EE is as it has recently appeared on my wage slip as a deduction

  104. Susan Kelly on December 8th, 2013
  105. 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.

  106. admin on December 8th, 2013
  107. 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?

  108. mark on December 9th, 2013
  109. 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!

  110. admin on December 10th, 2013
  111. 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 ?

  112. Adi wickes on January 7th, 2014
  113. 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.

  114. admin on January 7th, 2014
  115. 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

  116. rob on January 7th, 2014
  117. 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!

  118. admin on January 7th, 2014
  119. 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

  120. Marianne on March 4th, 2014
  121. 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!

  122. admin on March 4th, 2014
  123. 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!

  124. Emma on March 7th, 2014
  125. 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.

  126. admin on March 8th, 2014
  127. 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!

  128. Kate on March 21st, 2014
  129. 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.

  130. admin on March 22nd, 2014
  131. 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.

  132. James on April 16th, 2014
  133. 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.

  134. admin on April 17th, 2014
  135. 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

  136. Lola on April 25th, 2014
  137. 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!

  138. admin on April 28th, 2014
  139. 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

  140. Nick Le on April 30th, 2014
  141. 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

  142. admin on April 30th, 2014
  143. 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?

  144. Andrew on May 2nd, 2014
  145. 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.

  146. admin on May 2nd, 2014
  147. 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!!!

  148. Nick Le on May 3rd, 2014
  149. 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!

  150. admin on May 3rd, 2014
  151. 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?

  152. Kelly on May 23rd, 2014
  153. 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!

  154. admin on May 23rd, 2014
  155. 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!

  156. Ju on June 6th, 2014
  157. 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.

  158. admin on June 6th, 2014
  159. 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,

  160. Toot on June 25th, 2014
  161. 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.

  162. admin on June 25th, 2014
  163. 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

  164. David on July 23rd, 2014
  165. 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!

  166. admin on July 23rd, 2014
  167. 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

  168. Eve Geary on August 6th, 2014
  169. 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.

  170. admin on August 6th, 2014
  171. 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?

  172. Eve Geary on August 27th, 2014
  173. 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.

  174. admin on August 28th, 2014
  175. 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

  176. Jessica Browne on October 12th, 2014
  177. 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.

  178. admin on October 13th, 2014
  179. 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

  180. Lavi on November 29th, 2014
  181. 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.

  182. admin on November 29th, 2014
  183. 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

  184. Rob on December 12th, 2014
  185. 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?

  186. Rob on December 12th, 2014
  187. 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.

  188. admin on December 13th, 2014
  189. 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?

  190. Rob on December 15th, 2014
  191. 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.

  192. admin on December 15th, 2014
  193. 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.

  194. Rob on December 16th, 2014
  195. 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.

  196. admin on December 16th, 2014

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