How much do I get taxed on 8 year Bonus money?

Scottyb666

Swinger
Hi was just wondering what is the tax you pay on the 8 year bonus which for me is 15,000 ... I'm not sure wether to take my six year bonus then my eight year ( £7500 and £5000 ) I know it's £2500 but I hear it will work out better because you won't get 'super taxed' because I will earn way to much in that tax year with all the oversea allowances and lsa etc . If someone could explain what is the best option for me it would be much appreciated ...... To the blokes that call me greedy , stupid , a crow etc thanks for that also
 
The higher rate of tax is 40%, and the basic rate is 20%

The tax you would pay on the £7500 bonus is exactly the same as the tax you would pay on the first £7500 of the £15000 bonus, so that bit can be ignored.

If you were paying tax at the higher rate on the remaining £7500 of the £15000 bonus, you would pay £3000 and pocket £4500. If instead you took the £5000 and paid only tax at the lower rate, you would pay £2000, and pocket £3000. Taking the £7500 and £5000 bonuses rather than the £15000 bonus would therefore save you £1000 in tax, but cost you £1500 to do so.
 
The tax you would pay on the £7500 bonus is exactly the same as the tax you would pay on the first £7500 of the £15000 bonus, so that bit can be ignored.

That's not strictly true, as the £7500 bonus is in year six, and the £15000 bonus is in year eight, so the OP might pay only £1500 on the year six bonus, and £3000 on the first £7500 of the £15000 bonus in year eight, a difference of £1500, which wipes out the £1500 extra.
 

The_Snail

ADC
RIP
The higher rate of tax is 40%, and the basic rate is 20%

The tax you would pay on the £7500 bonus is exactly the same as the tax you would pay on the first £7500 of the £15000 bonus, so that bit can be ignored.

If you were paying tax at the higher rate on the remaining £7500 of the £15000 bonus, you would pay £3000 and pocket £4500. If instead you took the £5000 and paid only tax at the lower rate, you would pay £2000, and pocket £3000. Taking the £7500 and £5000 bonuses rather than the £15000 bonus would therefore save you £1000 in tax, but cost you £1500 to do so.
That's not strictly true, as the £7500 bonus is in year six, and the £15000 bonus is in year eight, so the OP might pay only £1500 on the year six bonus, and £3000 on the first £7500 of the £15000 bonus in year eight, a difference of £1500, which wipes out the £1500 extra.

Are you arguing with yourself?

This is why I never did "Pay".
 
That's not strictly true, as the £7500 bonus is in year six, and the £15000 bonus is in year eight, so the OP might pay only £1500 on the year six bonus, and £3000 on the first £7500 of the £15000 bonus in year eight, a difference of £1500, which wipes out the £1500 extra.
Yes, but in that case, the tax paid on the £5000 in year eight would be the same as the tax paid on the first £5000 of the £15000 bonus also in year eight, so it's only the tax on the rest (40% of £10000 = £4000 tax, £6000 pocketed vs 20% of £7500 = £1500 tax, £6000 pocketed).
 
Yes, but in that case, the tax paid on the £5000 in year eight would be the same as the tax paid on the first £5000 of the £15000 bonus also in year eight, so it's only the tax on the rest (40% of £10000 = £4000 tax, £6000 pocketed vs 20% of £7500 = £1500 tax, £6000 pocketed).

So what you're saying is,worst case scenario taking the £15000, you might end up with only the same amount as taking the two separate bonuses.
 
So what you're saying is,worst case scenario taking the £15000, you might end up with only the same amount as taking the two separate bonuses.
Actually, no. As you would get the first bonus two years earlier, it is worth more in real terms. If you used it to pay off a loan, it would save you two years of my interest payments, or if you put it into an ISA or similar, it would earn you two years worth of income.
 

The_Snail

ADC
RIP
So what you're saying is,worst case scenario taking the £15000, you might end up with only the same amount as taking the two separate bonuses.
Actually, no. As you would get the first bonus two years earlier, it is worth more in real terms. If you used it to pay off a loan, it would save you two years of my interest payments, or if you put it into an ISA or similar, it would earn you two years worth of income.

You are! You're arguing with yourself!
 

Scottyb666

Swinger
So how much would I get taxed if I waited for the 15k and how much would I get taxed on the £7500 then the £5000 ? Which would work out better . I get what your saying about putting into a isa but is it better to wait until 8 ?
 
Blow it all on cocaine, wine, beer and fags, oh and sweet loose women, then you wont mind so much how much you've had to give to the taxman :(
 

Scottyb666

Swinger
The higher rate of tax is 40%, and the basic rate is 20%

The tax you would pay on the £7500 bonus is exactly the same as the tax you would pay on the first £7500 of the £15000 bonus, so that bit can be ignored.

If you were paying tax at the higher rate on the remaining £7500 of the £15000 bonus, you would pay £3000 and pocket £4500. If instead you took the £5000 and paid only tax at the lower rate, you would pay £2000, and pocket £3000. Taking the £7500 and £5000 bonuses rather than the £15000 bonus would therefore save you £1000 in tax, but cost you £1500 to do so.
So by waiting 2 years I'm only saving a extra £500 ? Maybe like you say be best off taking the 6 then the 8 year money ... What would I be left with after tax on the two payments ? Do I get taxed even more because I get around £1800 in that pay packet also ( my basic pay maybe more if I go away)
 
So by waiting 2 years I'm only saving a extra £500 ? Maybe like you say be best off taking the 6 then the 8 year money ... What would I be left with after tax on the two payments ? Do I get taxed even more because I get around £1800 in that pay packet also ( my basic pay maybe more if I go away)
It depends. What it depends on is how much you taxable pay you get paid in the year or years you get your bonus.
Example 1. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is exactly £5000 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
NI paid on bonus in year 6 @12%, £900
Bonus received in year 6 after tax & NI, £5100
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
NI paid on bonus in year 8 @12%, £600
Bonus received in year 8 after tax & NI, £3400
Total bonus received after tax & NI, £8500.
OR
Bonus taken in year 8, £15000
Tax paid on first £5000 @ 20%, £1000
NI paid on first £5000 @12%, £600
Tax paid on remaining £10000 @ 40%, £4000
NI paid on remaining £10000 @2%, 200
Total bonus received after tax, £9200
Example 2. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is over the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
NI paid on bonus in year 6 @12%, £900
Bonus received in year 6 after tax & NI, £5100
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @40%, £2000
NI paid on bonus in year 8 @2%, £100
Bonus received in year 8 after tax & NI, £2900
Total bonus received after tax, £8000.
OR
Bonus taken in year 8, £15000
Tax paid on £15000 @ 40%, £6000
NI paid on £15000 @2%, £300
Total bonus received after tax & NI, £8700
Example 3. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is exactly £7500 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
NI paid on bonus in year 6 @12%, £900
Bonus received in year 6 after tax & NI, £5100
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
NI paid on bonus in year 8 @12%, £600
Bonus received in year 8 after tax & NI, £3400
Total bonus received after tax & NI, £8500.
OR
Bonus taken in year 8, £15000
Tax paid on first £7500 @ 20%, £1500
NI paid on first £7500 @12%, £900
Tax paid on remaining £7500 @ 40%, £3000
NI paid on remaining £7500 @2%, £150
Total bonus received after tax & NI, £9450
Example 4. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is more than £15000 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
NI paid on bonus in year 6 @12%, £900
Bonus received in year 6 after tax & NI, £5100
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
NI paid on bonus in year 8 @12%, £600
Bonus received in year 8 after tax & NI, £3400
Total bonus received after tax & NI, £8500.
OR
Bonus taken in year 8, £15000
Tax paid on £15000 @ 20%, £3000
NI paid on £15000 @2%, £300
Total bonus received after tax, £11700.

Edited to add NI calcs.
 
Last edited:

Scottyb666

Swinger
It depends. What it depends on is how much you taxable pay you get paid in the year or years you get your bonus.

Example 1. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is exactly £5000 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
Bonus received in year 6 after tax, £6000
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
Bonus received in year 8 after tax, £4000
Total bonus received after tax, £10000.

OR

Bonus taken in year 8, £15000
Tax paid on first £5000 @ 20%, £1000
Tax paid on remaining £10000 @ 40%, £4000
Total bonus received after tax, £10000

Example 2. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is over the upper tax bracket.

Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
Bonus received in year 6 after tax, £6000
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @40%, £2000
Bonus received in year 8 after tax, £3000
Total bonus received after tax, £9000.

OR

Bonus taken in year 8, £15000
Tax paid on £15000 @ 40%, £6000
Total bonus received after tax, £9000


Example 3. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is exactly £7500 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
Bonus received in year 6 after tax, £6000
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
Bonus received in year 8 after tax, £4000
Total bonus received after tax, £10000.

OR

Bonus taken in year 8, £15000
Tax paid on first £7500 @ 20%, £1500
Tax paid on remaining £7500 @ 40%, £3000
Total bonus received after tax, £10500


Example 4. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is more than £15000 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
Bonus received in year 6 after tax, £6000
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
Bonus received in year 8 after tax, £4000
Total bonus received after tax, £10000.

OR

Bonus taken in year 8, £15000
Tax paid on £15000 @ 20%, £3000
Total bonus received after tax, £12000

Right so i have to earn £7500 less than £42,000 in the tax year ? April to April ? Is that including the bonus and is that my gross pay for the year ? Do I get taxed as soon as the bonus goes in or does it mess up my pay for the year ? I get around £1700 a month but by my year 8 point I reckon I will get around £1900
 

Attachments

  • image.jpg
    image.jpg
    197.6 KB · Views: 60
It depends. What it depends on is how much you taxable pay you get paid in the year or years you get your bonus.

Example 1. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is exactly £5000 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
Bonus received in year 6 after tax, £6000
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
Bonus received in year 8 after tax, £4000
Total bonus received after tax, £10000.

OR

Bonus taken in year 8, £15000
Tax paid on first £5000 @ 20%, £1000
Tax paid on remaining £10000 @ 40%, £4000
Total bonus received after tax, £10000

Example 2. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is over the upper tax bracket.

Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
Bonus received in year 6 after tax, £6000
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @40%, £2000
Bonus received in year 8 after tax, £3000
Total bonus received after tax, £9000.

OR

Bonus taken in year 8, £15000
Tax paid on £15000 @ 40%, £6000
Total bonus received after tax, £9000


Example 3. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is exactly £7500 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
Bonus received in year 6 after tax, £6000
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
Bonus received in year 8 after tax, £4000
Total bonus received after tax, £10000.

OR

Bonus taken in year 8, £15000
Tax paid on first £7500 @ 20%, £1500
Tax paid on remaining £7500 @ 40%, £3000
Total bonus received after tax, £10500


Example 4. Pay in year 6 is more than £7500 under the upper rate tax bracket, pay in year 8 is more than £15000 below the upper tax bracket.
Bonus taken in year 6, £7500
Tax paid on bonus in year 6 @20%, £1500
Bonus received in year 6 after tax, £6000
Bonus taken in year 8, £5000
Tax paid on bonus in year 8 @20%, £1000
Bonus received in year 8 after tax, £4000
Total bonus received after tax, £10000.

OR

Bonus taken in year 8, £15000
Tax paid on £15000 @ 20%, £3000
Total bonus received after tax, £12000

I think you have left out NI contributions.
 
Right so i have to earn £7500 less than £42,000 in the tax year ?
Taking the £15000 will always give you more cash, the only question is, how much more, and is it worth the extra two years wait?
April to April ? Is that including the bonus and is that my gross pay for the year ?
Yes, yes, yes.
Do I get taxed as soon as the bonus goes in or does it mess up my pay for the year ?
Very good question, and the answer is, it depends on how much you get paid each month and which month you get the bonus. If you only pay tax at the basic rate, and you get the bonus in April, you will pay more tax than you expect, as the bonus will take you well into the higher rate tax bracket for that month. The amount you can earn before paying tax at each rate, is divided by twelve and applied to each month. If you get a bonus in April, it is taxed as if that is the amount of money you will be getting every month, so might pay almost twice the amount of tax as you expect, but in subsequent months, will pay less tax than usual as you will have overpaid. Eventually by the end of the tax year, you should get all the overpayment back . If you take the bonus in March, at the end of the tax year, you should pay the exact amount of tax you expect.
I get around £1700 a month but by my year 8 point I reckon I will get around £1900
Pre tax?
 
Last edited:

Latest Threads

Top