Tax on Bonus

I'm in doubt of which salary they base to change you from tax 20% to 40% on bonus. For example, in 2022 if there was a gross salary+bonus of around £50,050 and current salary (changed in April'23) of £52,000. Bonus paid in April 2023 was taxed at 40%. So should the company consider the current salary to calculate the base for tax? Shouldn't the base be considered the salary + bonus related to 2022? The bonus is related to 2022. Thanks

Hi,

As it is paid in 2023 to 2024 year, the tax due will be based on your annual income for that year. As paid in April, 40% is correct on those figures.

Thank you.

I understand, thank you. But I find it quite unfair. The bonus is related to 2022 and not 2023. If the change in salary was done in May instead of April, tax charged would be 20% instead of 40%. But I believe there's no way to challenge this, is there?

Hi kespindola,

No. You are taxed on an arising basis which means the bonus is taxed in the year it is paid. 

Thank you. 

Hi I am currently on a salary of 50,000 per annum but my salary will increase in April 2024 to 52,000 per annum. I am getting a bonus of £4900 in March for 2023. How will I be taxed and what should I expect to receive in total after tax thank you.

Hi,

With your 2023 to 2024 pay per annum being exactly £50,000, you can expect your bonus in March to be taxed at the 40% rate. The exact figure you can expect to receive will depend on a number of different factors, though, including the code being operated against your wage. please contact our Income Tax team so we can advise you further.

Income Tax: general enquiries

Thank you.

Hi I earn a monthly bonus on parts installed on machines for example say i install a new heating element that element cost the customer £100 I would earn £10 I bonuses that month, but as that item has already had VAT paid on it do I need to pay tax on the £10 ain’t that being taxed twice

Hi jamgray,
The VAT will be covered by your employer. the bonus for you is still taxable income.
Thank you. 

Hi, I'm due to receive a bonus at the end of September (this month) of 6k, this will take me to 40% tax threshold - what happens after this month? October, November etc, will I be taxed 40% for the foreseeable or does it go back to 20% when I'm paid normally in October? Thank you,

Hi 
It should go back to 20% as long as your total PAYE taxable income for the year, moving into October and November, goes back below the 40% threshold.  
Thank you.