bonus payment

I am eligible for split year and the start date of the UK part is 30 May 2022. My employment annual bonus was paid in Aug 2022, for performance period of 12 months from 1 Jul 2021 to 30 Jun 2022 I continue to work for my Hong Kong-based employer after moving to the UK, and my salary and bonus are paid to my Hong Kong bank account. Should I declare my bonus in full amount? Or time-apportioned?

Hi,

HMRC taxes income on the 'arising' basis.  

Although this bonus is based on performance of the previous year, it is paid to you in 2022 to 2023 tax year, so should be included in 2022 to 2023 tax return.

Thank you.

Hi, My question is, from the perspective of 2022 to 2023 tax return, should I declare the amount of bonus in full amount or time-apportioned? The performance bonus covered 11 months before the start date of UK part and covered 1 month after the start date of UK part. If the bonus received is 12k GBP, is it correct to declare 1k GBP for the year 2022 to 2023? Thank you.

Hi,
 

Please note that the receipts basis of assessment applies to all general earnings. This means that the full amount of the bonus should be reported in your 2023 tax return.  See Link: Employment Income Manual  . Thank you.

Hi, In the situation that bonus is paid based on the performance period spans two tax years, and part of the performance period is related to job performed overseas. Does EIM40012 apply to attribute the bonus into 2 tax years accordingly? Assume I don't elect split-year treatment in self-assessment. Reference from EIM40012 (para. 4/5): If the performance period spans more than one tax year, Section 16(4) ITEPA 2003 applies. The bonus should be apportioned to the relevant tax years on the basis of a just and reasonable apportionment. Section 16 attributes general earnings to one or more tax years. Thank you.

Hi,
 

EIM40012 advises that "Unless there is evidence to the contrary, HMRC takes the view that performance bonuses are “for” the performance period. This may be a calendar year or the company accounting period. In the case of specific projects, it may be the period beginning on the date when work started and ending when the specified outcomes were achieved".  If the performance period is two years, then the bonus can be treated as taxable over the two years . Thank you.

Hello. I receive a quarterly bonus of £2500 (£10k per annum) depending on performance/attendance and have received 3 payments so far. However, each bonus I have received has been heavily taxed and I have ended up with less than half of what was paid. My baseline salary is just under £29k, so I'm wondering If I will be eligible for a rebate at the end of the tax year. Or is this the norm for me going forward. Thank you

Hi S McKenna,
The system will tax you as if you are getting that extra payment on a monthly basis and then reimburse you throughout the year when it realises that's not the case. it should work out the correct tax has been paid at the end of the year.
Thank you. 
 

I moved to the UK in August 2023 and has been working. Hence I believe I am tax resident in the UK since Aug 2023. Before that I was in Hong Kong and employed by a Hong Kong employer. I received bonus from my pervious employment in Hong Kong in January 2024. This bonus was credited by Hong Kong employer to my Hong Kong bank account and is taxable in Hong Kong. My questions are - do I need to report this bonus to HRMC? Do I need to pay UK tax on this bonus? What should I do to avoid double taxation? I am expecting to apply arising basis.

Hi K,
You will need to review the guidance at RDR3 (RDR3: Statutory Residence Test (SRT) notes) and take the statutory residence tests.  As August 2023 to April 2024 will be more than 183 days, you will be tax resident in the UK for the whole tax year.  You will need to considre whether split year treatment applies.  If it does, you only declare your world wide income from the date you arrived in the UK until the end of the tax year.  If split year treatment does not apply, you will need to declare your worldwide income for the whole tax year and claim any foreign tax credits for tax paid overseas.  The Hong Kong / Uk tax treaty allows for your employment income derived while living and working in Hong Kong to only be taxed in Hong Kong.  This would include the bonus payment made, when you had moved to the UK.
Thank you.