Question about taxs and overtime..

Diagro

Diagro

Diagro

Soldato
Joined
3 Jun 2012
Posts
11,253
Hey

I have a quick question regarding overtime and paying higher rates of tax / NI and Student loan payments.

As an example say:

I get paid £1445 before Tax
Tax's = £204
After Tax's its £1240 into the bank

One month i do 35.5 Hours extra (one week nearly)

This is billed at £10.50 per hour, = £372.75

This would take that month up to £1817 Before Tax.

Tax man decides to take £357 of which £33 is Student Loan repayments.

Ok so why did the Tax just shoot up by £125? is it that the TAX is %20 and the NI is %12? That's nearly a bloody Third!

Also Why did my Student loan get triggerd?
These numbers wont meet the limit to make repayments (around £21k)
So is that a mistake?

ofc i dont mind repaying my student loan, but if i dont meet the requirements that i agreed to then i dont feel i should be loosing the £33... That could buy me a weeks lunches!!! :rolleyes:
EDIT: Just found out what i was told is a LIE, Bloody sods at the student loan company, I was at uni for 4 years, and i started in 2011 with an Entry Level course, But because i was actually at uni before i did my degree i fall into Plan 1... 9% of everything over £17,335 CHEEKY SODS

Basically i am a little miffed that working an extra week would only equate £220, NOT worth it what so ever. Would much rather stay at home with the wife over the school holidays.
 
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That's all correct.

Once you've used your tax and NI free allowance in a month you will get taxed at nearly a 1/3 (20% Tax and ~12% NI) on the rest - which includes your normal pay over those allowances.

Your student loan was triggered as it looks at the monthly payment (you don't just start paying once you've earn't 21k in the year). So just like tax and NI, there is a monthly trigger ie : 21,000 / 12 = £1,750 / month. Once you go over that you pay your 9% (?) on the rest


Edit : just had a quick look and it seems you can claim the payment back from the SLC (probably after the year end) if you end up not earning the threshhold

Edit 2 : heh, if your threshhold is the £17,335 then your pay is bang on the threshhold anyway of £1,444 / month :p so yes, you paid 9% on the full O/T amount, and you won't be able to claim it back
 
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Welcome to the real world where you either lose 32% or 42% depending on how much extra you earn.

Don't like it, vote in a new government. :P
 
Diagro said:
Basically i am a little miffed that working an extra week would only equate £220, NOT worth it what so ever. Would much rather stay at home with the wife over the school holidays.
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You know, at 4.4 weeks per month, you would only normally earn at £280 for a week's work (based on your figures for your usual pay). Not much different, really.

Maybe it's worth staying home full time?
 
So you earn £17340k per year (1445*12).

The first £10600 is tax free.
Leaving £6740 (£540/month) which gets taxed at 20%. So £112 per month in tax.

Anything over £672 per month is reduced by 12% for National Insurance, so £92.76 in NI payments each month.

So £92.76 + £112 = £204 per month, which is what you were losing in tax and NI.

Your monthly pay then rises to £1817 and you're now effectively earning £21804 per year.

21804 - 10600 = £11204/year of taxable pay, or £934/month @ 20% = £187 in tax.
1817 - 672 = 1145 @ 12% = £137.40 in NI.

So £187 + £137.40 = £324.40 + £33 student loan = £357.70.

So all looks correct to me.
 
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My hourly rate is (for the sake of arguement) £15.00
Overtime is single rate.

Therefore I lose:
20% Tax
12% NIC
9% Student Loan
3% pension (Note I am not 100% sure pension comes out of overtime, but if I had to guess, it would do).

Therefore I take home 56% of my £15.00, which is £8.40.
Then if you use the £8.40 for fuel/booze/fags the tax man gets a massive cut of that (I don't drink much or smoke at all).

Life's a bitch, but if you want something in this world you've got to be prepared to put the hours in.

I do overtime for ONE reason, which is overtime is 'free' money as my basic salary takes care of my day-to-day life and overpay my mortgage.
Overtime gets blown on fun stuff or just items I want.
This month I have bought a Microserver, for no other reason than I wanted one.

I drive 40 miles to work and go to the gym too.
Recently I have met someone (girlfriend) and all is going well.
With overtime something has to give: Time with family/girlfriend, personal chilling time, gym time, housework time, sleep.

Overtime is not always worth it.
Companies are tight arsed only giving single rate for OT. I am a Design Engineer and the hourly rate the customer pays includes overheads.
These overheads to do not increase in overtime, so the company just takes a juicier cut.
 
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220 extra is still a huge amount compared to your basic, how can you even afford to live on basic. Always better to look at what the money will allow you to do, rather than what the government takes. £220 easily pays for a weekend away. So many deals on like travelzoo for like £99 leaves you some for fuel and spending money.
 
PAYE may also have weird tax amounts sometimes if you have irregular pay amounts.

I worked for a company who gave you an annual bonus quite early in the tax year, the way their calculations worked, they assumed i'd earn that much for the rest of the year and hence upped my tax liability in the month as earning that amount would push me up into the next tax bracket.

I did get it back in paying less tax for the rest of the year. Whether that's still the case, as it was some time ago, I'm not sure.
 
OpenToSuggestions said:
My hourly rate is (for the sake of arguement) £15.00
Overtime is single rate.

Therefore I lose:
20% Tax
12% NIC
9% Student Loan
3% pension (Note I am not 100% sure pension comes out of overtime, but if I had to guess, it would do).

Therefore I take home 56% of my £15.00, which is £8.40.
Then if you use the £8.40 for fuel/booze/fags the tax man gets a massive cut of that (I don't drink much or smoke at all).

Life's a bitch, but if you want something in this world you've got to be prepared to put the hours in.

I do overtime for ONE reason, which is overtime is 'free' money as my basic salary takes care of my day-to-day life and overpay my mortgage.
Overtime gets blown on fun stuff or just items I want.
This month I have bought a Microserver, for no other reason than I wanted one.
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That's not quite accurate. You'd need to consider your tax free allowance so the effective tax % is actually lower.

As an example, someone on 20k a year takes home 83.4% of their salary.
 
Basher said:
That's not quite accurate. You'd need to consider your tax free allowance so the effective tax % is actually lower.

As an example, someone on 20k a year takes home 83.4% of their salary.
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I think the op already had and was just referring to then extra hours he does.
 
Greebo said:
Welcome to the real world where you either lose 32% or 42% depending on how much extra you earn.

Don't like it, vote in a new government. :P
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I'm not sure that would be a wise idea with Corbyn heading labour.

He'd likely screw anyone over who's earning 20k/yr. So you'd likely end up paying even more in tax.
 
Semple said:
I'm not sure that would be a wise idea with Corbyn heading labour.

He'd likely screw anyone over who's earning 20k/yr. So you'd likely end up paying even more in tax.
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Whilst we're going a little off-topic here, people earning £20k are exactly the sort who would be better off under a Corbyn government. It's the high earners who would pay more.

That's not to say there would be a tax cut for lower earners, but you would probably see some form of a return to more extensive child and working tax credits and suchlike (a form of tax-rebate), which would benefit low and middle-earners.
 
Semple said:
I'm not sure that would be a wise idea with Corbyn heading labour.

He'd likely screw anyone over who's earning 20k/yr. So you'd likely end up paying even more in tax.
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With this new upcoming mimimum wage it would be better for me not to have a technical job I have to commute to. I could just go back to Tesco and walk round dribbling whilst stacking shelves.
Will be interesting how many people in stressful jobs just say **** it and go to do a minimum wage job.
 
OpenToSuggestions said:
With this new upcoming mimimum wage it would be better for me not to have a technical job I have to commute to. I could just go back to Tesco and walk round dribbling whilst stacking shelves.
Will be interesting how many people in stressful jobs just say **** it and go to do a minimum wage job.
Click to expand...

Personally i was thinking about resigning and signing up to this thing called the "dole"?

I hear the amount of minimal effort you put in for what pay you can earn is incredible!
 
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