deletebeepbeepbeep
Well-known member
- May 12, 2009
- 21,112
That's the way PAYE works. If you get £2K normal salary in April (Month 1) and a £10K annual bonus also in April then PAYE thinks you are earning £144,000 a year and so clobber you for 40% / 45% tax on two-thirds of it.
However, in Month 2 when your gross income returns to £2K then PAYE will adjust downwards and the tax over-deducted will start coming back to the employee via higher net pay. In my example, by Month 12 the employee will have earned £34K and ALL of punitive tax will have been repaid by the end of the tax year.
Yeah this is how it works for me with my occasional yearly bonus (although it tips me in to the upper bracket rather than top bracket!)