Tax on joining bonus.
- Thread starter Mulder
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Man of Honour
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I'd suspect it will count towards your personal allowance simply but if you haven't submitted a P45 or ensured somehow that you are on the correct tax code you may well get slapped with emergency tax.
Soldato
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If it's paid alongside your salary and you're on PAYE then you'll be taxed on it. Your tax get's spread out over the year, it's not a case of no tax until you cross the PA threshold and then they start deducting.
You are all missing that he is a student.
Normally you would be taxed on a week by week basis as a normal employee. If you are a student and returning to full time education and just a holiday job then you can submit a P38S form and no tax (but NI will) will be deducted as follows:
However, i doubt the above applies as I have never heard of an employee getting a joining bonus for a holiday job. And even if this was the case you might fall foul of the bonus and your wages is expected to be over the annual personal allowance.
Full details here:
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_10010537
Normally you would be taxed on a week by week basis as a normal employee. If you are a student and returning to full time education and just a holiday job then you can submit a P38S form and no tax (but NI will) will be deducted as follows:
However, i doubt the above applies as I have never heard of an employee getting a joining bonus for a holiday job. And even if this was the case you might fall foul of the bonus and your wages is expected to be over the annual personal allowance.
Full details here:
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_10010537
WAS a student, starting a job and getting a joining bonus, golden hello.
Assuming that you are going onto PAYE and part of an ongoing monthly PAYE scheme, you will be taxed as if this is one 12th of your annual income, so your whole income for the month is usually assessed against 1/12th of your Annual PA.
Effectively it is treated as a "Bonus" Just paid up front and not in arrears.
Taxation details Here
Wrong.
why ?
He never stated he "was" a student, but he said he is a student although I suspected otherwise.
Assuming then that this is his first job after leaving university, so long as he has got all his paperwork in order he should be taxed as follows:
Assuming start date 1st September and first months salary plus bonus plaid at the end of Septemeber.
April to September annual allowance is half of £6475 which is £3237.50 so he will be taxed on everything he earns above that in the first month.
However, most likely he will be put onto a week one/month one tax code at least to begin with which will mean he will only get £539.58 allowance for the first month and will be taxed on everything above that.
Of course, he would then get a tax refund after the year end in April 2010.
Various reasons as I have detailed and linked to earlier.
The Inland Revenue are very, very reluctant to give somebody a full tax code when they have only started work pert way through the year as they are always suspicious that they may have worked for somebody else already and used that tax free allowance up but that employer never sent a new starter details through so they like to wait until after the end of the tax year and all empoyer submissions have been made to make sure.
So the OP will get a week 1/month 1 tax code which will only give him 1/12 of his allowance each month and ignores his allowance for the first 6 months of this year which he hasn't used.
that is effectively what I said
Sorry, it does appear that we are both saying the same thing however, I didn't really make it clear enough that the likelihood of my first scenario is slim. Apologies for posting such a cheeky repsonse to your post and jumping in so quick when you were pretty much saying the same as me.
I just wanted to make it clear that what you stated would not happen by itself and would require some effort to acheive. I didn;t want the OP to think "that's great, no tax, job sorted etc" Also I am no longer sure that the Inland Revenue would still give somebody their full tax code nowadays as they have tightended things up a lot but it's always worth a punt.
To the op: Contact your tax office as soon as possible and get the ball rolling. Don't leave it until after you have started work as the IR move slowly.
My first payslip showing how my starting bonus was treated a couple of years ago. I assume the approach taken here with the tax etc was correct - everyone who started at the same time (October) and was previously a student had the same treatment.
Thanks for all the replies, and thanks PeterNem, that's very helpful. A quick calculation says you're paying 12% tax, which seems very low? I'd be happy paying that on my bonus, as long as they get it right in the long run and I still have enough to buy a car. 
Greebo - Will do, I've had dealing with them before and they've been useless. Though I phoned them last week to say I'd overpaid last financial year and got my rebate cheque this morning, which is mental fast for a Government agency.
Greebo - Will do, I've had dealing with them before and they've been useless. Though I phoned them last week to say I'd overpaid last financial year and got my rebate cheque this morning, which is mental fast for a Government agency.
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