annual bonus tax implications

Hi,

As your bonus will be paid in the last month of the tax year, you should only pay 20% tax on that income if the figures provided are accurate. In the unlikely event that you are overtaxed on this income, it should be repaid when your 2022 to 2023 tax year is reconciled, which usually happens in May.

Thank you.

Hi, I have an annual salary of £39900, however, I have paid in to Salary sacrifice. my take home to date has been £24,500. im due to get a bonus of £10,690 at the end of March. Will this take me over the 40% tax threshold or will I be taxed at 20% on my bonus?

sorry, I managed to change. can you leave original post?

Hello! I was paid 86000 p/y salary monthly. PAYE, this payslip March 26 I am receiving an increase to 94000 and getting bonus. Am I understanding correctly that txes will be calculated for the prior year in general, but current month will be taxed higher? Also, according to what I read here tax rebate will be spread across next year, is this correct?

Hi stu D,

Your gross bonus would be added to your gross pay, after salary sacrafice. Any amount of your gross over £50,000 would be taxed at the 40% rate.

Thank you.

Hi all, I am a placement student and have an end of contract date in June (started June 2023). I have a Yearly salary of 25,000 (initially 21,775) and I will be receiving a bonus in my April pay of 2,334. As I have an end date, I’ve been warned that I may be over taxed since there is not enough months after my April pay for this to balance out. Firstly, just wondering if this is correct? And if so, is there any way to pro-actively sort this rather than wait for a refund the following year? Thanks!

Hi, I earn £30,000 yearly and this month I was paid £7,000 as a bonus alongside my £2,500 salary. I was overtaxed on this amount by around £400. How do I reclaim this?

Hello, I have just received my pay from work today for this month (March) and I am very confused here. My annual salary is £43,500 (only started from 1 Jan 24, it was £41,000 before). I received a £1,140 profit share from work this month. The extra income tax that I have paid for this month is £455.60. I asked the payroll team at work for help and they told I am now in the 40% rate band. How can that be please? Let's forget about my annual salary was on £41,000 between Mar 23 and Dec 23, £43,500 + £1,140 = £44,640. It is nowhere near to the £50,271 (40% tax band). Seeing March is the last month of the financial year, have I missed something here? Many thanks!

Hi jack4deakin,
Any refund due will be issued automatically after the end of the tax year when the system reviews your details.
Thank you. 

Hi Anton,
As you will be receiving your uprated pay and bonus in your last wage of the 23/24 tax year, you should not be over-taxed.
If you do overpay tax, though, this should be refunded to you when your overall 23/24 tax liability is calculated, which usually happens around May. Please note, if your overall pay exceeds £100,000, you may be required to complete a Self Assessment return.
Please  contact us by webchat or phone here:
Income Tax: general enquiries
For more advice.

Hi Josh

When your employment ends in June 2024 if you will be leaving the UK then you can complete a form P85 to claim any repayment due
Please see Get your Income Tax right if you're leaving the UK (P85)

Thank you

Hi B98

That's correct - your income as presented would not be liable for the 40% rate of tax. There may be other income on your record that increases your overall year's income into the higher rate band, though.
To allow us to review your record, and confirm if your profit share has been taxed correctly, contact us by webchat or phone via Income Tax: general enquiries

Thank you

Hi there, I earn £70,000 annually - common 1257L/ 0 tax code. I have two questions: 1. I took home only £4129.10 in April 2024 whereas it should be £4263. My projected income in my HRMC account is set to £72903 annually. Is this projected income creating issue with my monthly take home income? As, there is no guarantee I would get bonus this financial year and also its usually less than the projected. What needs to be corrected so that I get my normal £4263 per month? and how do I get my refund for April 2024 as it should be £4263? 2. I received £2000 in bonus in March 2024 pay and roughly £1100 was deducted in tax. What went wrong there? When will this be adjusted and refunded? How does this work or how was this supposed to work? This is a big chunk that has been taken out. Many thanks

Not been answered here - as far as I can tell. What to do when the "tax rebate" never materialises? My understanding is if you get a bonus, and in that bonus month you get taxed more, then the next month when the salary goes back to normal, not only does one pay less tax than the tax paid during the bonus month, but less tax is paid as a rebate. Is this correct? Because I have yet to see any such rebate. The tax doubles (for a bonus of just £1k, £2k) from its usual monthly figure for the bonus month, and the following month it goes back to what it usually was - no rebate, no nothing. If that is how it is supposed to be, so be it. I just need clarification on the language above where an HMRC admin wrote "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".

Hi Gagandeep Singh,
The tax is calculated based on your pay in the tax year and the tax code operated.
If your employer is using the correct code, 1257L, then the corrrect tax should be paid.
For the tax year 2023/24 which ended 5 April 2024 once we receive the PAYE details from your employer we will review the record and if overpaid a calculation will be issued. 
Thank you. 

Hi emil Amor,
You are correct.
As it is for the 23/24 tax year, you can use:
Income Tax
To see if a refund is in fact due.
Thank you, 
 

I am based in Scotland with an annual salary of £41,174. I am looking at getting a retention bonus paid in Nov or Dec 2025 of £10,000. What will be the tax implications be, i.e . how much of that bonus will I actually get?

Hello! New to this community and I would like to pose a question about salary declaration. I have a basic salary of £123,500 and I have to file a self assessment every year, On the self assessment it asks for your estimated salary for the year ahead. I have submitted this as £123,500. I am also on a 15% yearly bonus and this could potentially increase my yearly earnings to $138,000 a) Do I need to declare my salary on my self assessment with a "potential" bonus or just my basic salary? b) If I get this bonus (not guaranteed) this will be taxed too with at the time when this get paid (March 2025) c) If I declare that my salary is a potential £138,000 and I don't get this, I'll be taxed at 45% for the year ahead. Any advice would be greatly appreciated. Kind Regards,

Hi ,
 

On your Self Assessment you would declare you actual income for that tax year including any bonus payment received. For your tax code an estimate of your income is used to calculate the personal allowance due. If you are expecting a bonus then this will need to be included when you calculate your estimated income. If during the tax year you realise that you will not be getting a bonus you can amend your estimated pay on your personal tax account :   www.gov.uk/personal-tax-account which will update your tax code . If you over estimate your income then any repayment due will be calculated at the tax year end when you complete your tax return or if you no longer meet the criteria through your PAYE records. You can check if you still meet the criteria at : www.gov.uk/check-if-you-need-tax-return  . Thank you .

Hi, Jean-Paul,
Please find below a link to the rates of income tax for Scotland.  
Income Tax in Scotland
We cannot provide an exact figure of income tax that will be deducted from your bonus as this is dependant on your personal circumstances.   
Thank you.