annual bonus tax implications

Hi all My annual base salary is £30,285.00 per annum this month (June 2023) I will received a £5,000.00 bonus. Will this be taxed at a rate of 40%? Having used various online tax calculators they seem to note I could be taxed too much due to being above the monthly (but not yearly) threshold. My tax code hasn’t changed though. If i am taxed for the month of June at a rate of 40% how will the tax that I have overpaid be refunded to me? Hopefully I don’t have to now wait until next April, seems a bit unfair. I have read online it might come through the next pay slips but any idea in what portions if so, and do I need to let my employer or HMRC know? Thank you :-)

Hi Claire Finney,
You will be taxed extra in the month that the bonus is paid as the PAYE system thinks this will be your monthly pay for the rest of the year.
When you are paid in July and back to your normal monthy wage you will not be charged higher rate tax and will get a tax rebate in your pay by way of paying less tax that month.
Thank you, 

If i requested my bonus to be paid in March at the end of the tax year, instead of December will I pay less tax?

Hi G77W

No, as at the end of the tax year, your income will still be the same.

Thank you

Similar to the original poster, I was paid a bonus in November (£1,500) and only actually received £850 more than my standard pay due to being taxed too much. The reply from HMRC Admin 25 suggested that this extra tax would be refunded in the next wage when my salary returns to normal. This did not happen, in my December pay I received the same as I always do - i.e. no tax refund. My salary is £36,000 therefore the bonus should not push me into the nex tax bracket.

Hi, ilg1888
In this case, there are a few possible causes for your bonus being taxed too highly. Contact us by webchat or phone via Income Tax: general enquiries, where we can review your codes and advise on how any repayment due can be refunded to you.
Thank you.

I've had a similar problem and I find I have to go to the self assessment website PAYE section and update my estimated annual total income whereupon my tax code gets fixed.

Good afternoon A member of staff is due to receive an annual bonus. He has asked if the bonus can be staggered over several months because he thinks there will be a tax benefit from doing so. If I were to do this then it would cross over into the next financial year. I'm going to tell him this is not permitted as it's a salary expense which needs to be reflected in the period in which it was incurred. I was hoping that you could confirm that the explanation I have just given is correct and if there is anything else that is worth mentioning when I broach the topic.

Hi neilog,
The bonus would be taxable in the tax year it arises.  
Paying it over a period of time or in one payment will not change the tax payable.
Thank you.

Hi, I was looking for some advice. I have been offered an opportunity to earn a bonus on completion of a project. Probably completed by September 24 so bonus paid around then. My salary is £40k at the moment and the bonus will take me over to the 40% tax band. Please could I have some advice on what will happen to my tax for the rest of the financial year 24-25 once I have had the bonus. Also what will happen in Apr 25 when the new year starts as the bonus is just a one off and my salary will continue as my £40k.

My monthly salary in 2022 was £4583 and I was charged a tax of £707 every month. In October 2022 I received a bonus of £1000 and thus was charged £1114 in tax that month, which is fine. But in November 2022 my salary went back to the normal £4583, however the amount taxed changed to £784 and every month thereafter, even though my salary didn't change. Shouldn't the amount taxed be the same as before October? I've tried to claim to have been overtaxed and to claim a refund but the website always tells me I was taxed the correct amount. Can you please clarify this for me? In the end, over the course of the year, I was taxed nearly the total amount of my bonus, whilst receiving the exact same salary amount as before the bonus - this doesn't make any sense. Am I not entitled a refund?

Hi Emily29,
You will pay extra tax the month the bonus is paid and this will gradually be refunded over the rest of the tax year. once the new year starts, it will go back to normal.
Thank you.

Hi my current annual salary is £35,650 I’m able to apply for a 20k bonus from April 24 onwards. This will take my annual earnings to £55,650 but May my wage will go back to normal as this is only a bonus. I believe anything you earn over £50,270 gets supertaxed so does this mean £5,380 will get 40% taxed plus an extra 2% NI and the remainder of the bonus (£14,620) this will get 20% taxed and plus 10% NI. So the remainder of the 20k bouns after all the deductions should it be around £13,355? Also is April a bad time to submit the bonus as it’s the beginning of the new taxing year or does it not matter when you take?

Hi,

You will only pay the higher rate tax on the income above the 40% rate band. You can see information here:

Income Tax rates and Personal Allowances

The remainder of the tax will be at 20%.

If you take the bonus in April as the 1st month of the tax year you would only have 1 month of your personal allowance to set against the pay for the month. This would mean more tax would be due at the higher rate but any tax overpaid would be refunded over the remainder of the tax year. 

Thank you.

Hi, I am trying to understand my own situation by reading the above but struggling. I earn £45,864 a year. Next month I am getting a £4,953 bonus which will bring me over the £50.270 threshold. Is it worth asking for a lower bonus so I stay under the £50,270 tax band?

I’m getting a bonus next month that takes me over the 40 percent tax threshold. Is there a way to inform HMRC of my bonus so I don’t get over taxed in that month and then it returned in the next month? I would like to receive my whole bonus in one month. I.e. tell the paye system that this is not my normal wage per month

Hi Phil,
I am sorry there is not an option for this. The bonus will be taxed in the month received and any refund due given over the remainder of the tax year. 
Thank you.

Hi, Don't think this has been answered above. Annual gross salary £105,000. 10% employee contribution to pension via salary sacrifice. Assuming no other benefits/allowances, net taxable income £94,500 before personal allowance, correct? Full personal allowance available as net income below £100,000, correct? Bonus of £20,000. Can I take £6,000 of the bonus (so £5,400 net after pension contribution) without any affect on income tax personal allowance? The balance of the bonus would be paid into the pension. Thanks

Hi LD,
If your adjusted net income is below £100,000 then yes you will receive the full personal allowance.
Details of adjusted net allowance at Personal Allowances: adjusted net income.
If you want to discuss your own situation you will need to contact HMRC Income Tax: general enquiries
Thank you.

If I earn £39,690 and will receive 9450 bonus in March, will I overpay tax in that month as it’s the end of the tax year so I’m wondering if it’ll recognise only 20% tax should be applied? If not does it all get refunded in April or will I need to accept a slow return over the new tax year? Thanks