Tax on bonus?
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Caporegime
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I know @Kemik doesn't get out of bed for less than ten but let's call it sweeping up and be done with it.
I always cry when my bonus comes in. Damn taxman!
Same here, your salary you expect it and accept it, but then you hear £2000 bonus and think of everything you could buy with it, then your salary hits and you end up with half that
Caporegime
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Why?
It's already been explained several times that it looks correct.
Student loans take roughly 10%, tax at 20% so that's 30% gone without including NI or additional pension contributions which easily make up the other 10% or so.
I feel like I need a lamp you can rub... wait that sounds weird.
I'm ignoring pension and student loans, etc here but at £22.5k your normal setup is:
Gross: £1,875
Tax: £166
NI: £130
Net: £1,578
Bonus for one month will be £1,350 on top. NI will be £162 (12%) and tax will be £270 (20%). Extra take home will be £918. You should be aware that some companies make bonus pensionable and therefore pension may come off. Student loan will definitely come off if you have one at 9% or whatever the going rate is at the minute.
Not sure why people are talking about 40% band. Even with his bonus in one month he isn't touching the 40% monthly band for the PAYE calc.
The way it works normally is you will get hit for tax this month as this is how the tax tables work. Next month the pay will be back to normal and the tables used in the software will see you have overpaid tax for this period in the tax year and automatically give you a rebate, therefore reducing your tax to date back to what it should be for earnings to date.
Is it? Be glad you don’t live in most of the rest of Europe then.
Seriously though, educate yourself before you make up your mind on something. There’s lots of ways of measuring this because there are so many different taxes to take into account on top of income tax. In all the measures I have seen the U.K. is way down the list countries which tax their citizens the most. We’re around average globally and below average when compared to the rest of Europe. For example France and Germany raise significantly more in tax from their citizens.
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Is it? Be glad you don’t live in most of the rest of Europe then.
Seriously though, educate yourself before you make up your mind on something. There’s lots of ways of measuring this because there are so many different taxes to take into account on top of income tax. In all the measures I have seen the U.K. is way down the list countries which tax their citizens the most. We’re around average globally and below average when compared to the rest of Europe. For example France and Germany raise significantly more in tax from their citizens.
So arrogant to suggest I am uneducated because my opinion is different to yours, the tax as a % of GDP is shockingly differently between other countries like AUS, USA and the UK.
We pay 32% basic rate income tax, 20% VAT, 13% payroll tax and then 19% corporation tax.
Not to mention capital gains tax, stamp duty, and the myriad of other unnecessarily complex and fragmented taxes.
Don't forget inheritance tax...the biggest hustle of them all, pay tax forever, use taxed money to buy stuff...then your inheritors get to pay them more tax just because you died. Also additional SDLT if you happen to own another home.
Just wait for the taxes after this covid nonsense...
The difference between lower rate and higher rate is a trick anyway and people fall for it. The difference isn't 40% vs 20%. It is 42% vs 32%.
If you are still paying student loans then it is 51% and 41%.
Higher (until you hit 100k+) and lower earners benefit from the tax free allowance equally. It's so much closer to a flat tax system than people are aware. I think it should be much more progressive. Higher earners are far more able to use salary sacrifice in a meaningful way as well.
The USA has very different taxation depending on where you live. In some places I'd argue it is worse than the UK. Those tend to be the nicer parts of the USA with good public services. It is also massively complex with a myriad of federal and state taxes.
Then you have healthcare to pay for which Americans pay through the nose for.
If you are still paying student loans then it is 51% and 41%.
Higher (until you hit 100k+) and lower earners benefit from the tax free allowance equally. It's so much closer to a flat tax system than people are aware. I think it should be much more progressive. Higher earners are far more able to use salary sacrifice in a meaningful way as well.
The USA has very different taxation depending on where you live. In some places I'd argue it is worse than the UK. Those tend to be the nicer parts of the USA with good public services. It is also massively complex with a myriad of federal and state taxes.
Then you have healthcare to pay for which Americans pay through the nose for.
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It's true that the difference is more like 42% vs 32%, however you have to bear in mind that the employees also in practice pay employers NI too.
The only fair system is a flat tax, it's immoral to charge different groups different levels of taxes.
No its not. Taxing someone who earns 20K, 30% (average) is not the same as taxing someone who earns 100K 30% (average). A flat tax would be completely unfair.
The former would struggle to live, that would be immoral.
Im sorry if my post was upsetting, that wasn’t the intention.
No the difference is you have an opinion that takes in this country are high, I stated something factual (the U.K. tax burden isn’t high compared to the rest of the world and Europe in particular).
You’ve picked two countries with relatively low tax rates to make a point but that don’t makes the U.K. high compared to the rest of the world and in particular Europe. Only a handful of ‘developed’ counties have a tax burden as low as them, they often come with significant drawbacks.
For example, you may have lower taxes in the USA but you also have to pay through the nose for healthcare (or just don’t get any, or become ill once and it bankrupts you) and the regulatory burden is also very low, e.g. employees have very little rights or protections. What’s also amusing is that the tanks complain about high taxes, try and square that circle...
I never said the U.K. was the lowest but we are nothing like the highest either and when you compare to other countries in Europe who all pretty much follow the same rule book we are one of THE lowest and are the lowest of the ‘big players’ in Europe. Ireland is the only outlier but it’s a relatively small country, most are similar or higher, like I said we are very much middle of the road these days, if anything we are in the lower half of the table.
All of the ‘core’ eu counties have a higher tax burden (Spain, Germany, Italy and France with France and Italy having a at least 10% on the U.K. If ours is abhorrent, what is there’s?
Similar taxes to those you have listed exist elsewhere so I’m not sure what the point is.
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