Zelda Hyrule
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Bonus Tax /Redundancy
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