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Posted Mon, 22 May 2023 13:45:22 GMT by Zelda Hyrule
Hi all My annual base salary is £41k, this May I received a £9447.50 bonus and was taxed £3942.97, which is 41.7%. A bit of background info - the bonus has always been paid in Feb/March pay and this has been the case since I've been working in the company from 2016. However, this year there has been no communication from employer regarding bonus so I emailed them in April, which resulted in a discussion on redundancy, and they paid my bonus after I raised it in the first consultation redundancy meeting. Having used various online tax calculators they are all showing I should receive £6398, at 32.3% tax on bonus, therefore I've been overtaxed. Now my understanding is income tax is deducted when the payment is made, and since the bonus was made in May, I am only entitled to 2/12 of the yearly tax allowance at this point. The higher rate threshold in April and May means it's 2/12 of the yearly amount hence why I was taxed at 41.7%. The logic is I would pay less tax each month going forward, as I start to fall out of the higher rate threshold as the tax year progress. BUT since I am taking the redundancy offer, and the bonus is not part of the redundancy package, what does this means regarding my bonus overpayment? Will HRMC keep it until I find a new job, and then tax me accordingly to make up the different, or do I accept it's 41.7%? Any help is much appreciated. Thanks
Posted Wed, 24 May 2023 15:46:44 GMT by HMRC Admin 5
Hi,

You will have paid more as the payment was made in April.

As this is the first month of the tax year, the system assumes you will have the same incom eevery month.

If not, you will then receive a refund in the next months pay and so on until you reach the correct amount of tax paid for the period.

Thank you.

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