Overtime Tax

RickST · 20 Apr 2010 at 15:17

Hi all,
Not sure if this is the best place for this but anyway:

I have just had my wage slip and p60 which prompted a quick question.

I earn around 30k a year and do a fair amount of overtime

overtime is paid at £25 per hour

My question is: My overtime is always taxed at exactly 40% so if I do:

20 x 25 = 500 I actually take home 300 extra.

Is that right?

JayToukon · 20 Apr 2010 at 15:21

RickST said:
Hi all,
Not sure if this is the best place for this but anyway:

I have just had my wage slip and p60 which prompted a quick question.

I earn around 30k a year and do a fair amount of overtime

overtime is paid at £25 per hour

My question is: My overtime is always taxed at exactly 40% so if I do:

20 x 25 = 500 I actually take home 300 extra.

Is that right?

20 (hours) x 25 (£p/h) = £500 (before tax)
£500 x .6 (minus tax percentage) = £300 (after tax)

Is that what you mean?

RickST · 20 Apr 2010 at 15:29

Yes sorry, my question is, should all overtime be taxed at a flat 40%

D1ngd0ng · 20 Apr 2010 at 15:36

There is no special rate for OT and if you earn 30k a year then you shouldn't hit the higher tax rate unless you do a serious amount of OT

Participant · 20 Apr 2010 at 15:36

Doesn't sound right to me. Threshold for 40% tax is £37k something now.

RickST · 20 Apr 2010 at 15:37

that was what I was thinking, Who should I go and talk to about it? My accounts team, cab, hmrc?

MajorMaccas · 20 Apr 2010 at 15:42

If anything, the tax code for OT would be the same as a second job, base rate, BR, which is flat 20% across it all. Even if you would earning over the high earners threshold, the OT should still be 20% since that's not your salary.

Though that may be wrong, since that sounds quite fair... :rolleyes:

Participant · 20 Apr 2010 at 15:43

The_Sophisticate said:
Though that may be wrong

It is.

Otherwise, people would pay themselves 1 hr a week salary and do overtime at 20% til the cows came home.

booyaka · 20 Apr 2010 at 15:43

RickST said:
that was what I was thinking, Who should I go and talk to about it? My accounts team, cab, hmrc?

Check your P60.

What is your Total EARNINGs for the year including overtime and normal salary etc?

Say it's 40k a year.

Take off your personal allowance which should also be shown on your p60 - something like 648L

So 40,000 - 6480 (personal allowance) = 33,520

Your first £37,400 after your personal allowance is taxed at 20%, thereafter the rest is at 40%.

So if you earned £40k as per above you pay tax @ 20% on 33,520 = 6704 which should equal the amount on your p60.

If you've paid more than that is tax - contact HMRC and ask to reclaim the tax.

http://listentotaxman.com/

Glaucus · 20 Apr 2010 at 15:45

Ou have your p60, just use a tax calculator website and type in the total for last year and see if it works out.

RickST · 20 Apr 2010 at 16:02

I just used booyaka's example and it comes out perfectly to what I have paid so I guess its right.

I guess my student loan might be don't swear with my take home more than I thought.

fastwunz · 20 Apr 2010 at 16:04

RickST said:
I just used booyaka's example and it comes out perfectly to what I have paid so I guess its right.

I guess my student loan might be ******* with my take home more than I thought.

THIS lol

Simon · 21 Apr 2010 at 11:50

You will pay 9% of your OT as student loan.

Dolph · 21 Apr 2010 at 11:52

And don't forget NI.

20% tax + 11% NI + 9% student loan is 40% total take.

Simon · 21 Apr 2010 at 12:00

Painful isn't it