Low income band, taxed heavily on bonuses

[janig8]

Hi all,

I work in International Sales, with a base salary of £22,500.

This paycheck I was due my first quarterly bonus of £700, as the scheme was introduced in my most recent PDR.

When I checked my bank this morning, I noticed I only received about 60% of my bonuses due: £426.06

Can someone explain why I've been taxed into oblivion? Seems a little unfair that the government wants to take so much of my money when I don't earn that much...?

A cursory check on tax bands showed me that 40% income tax is for £46k- £150k, which I am obviously nowhere near!

Thanks in advance,
Jason

[AdamS93]

£140 IT (20%)
£84 Class 1 NIC (12%)

Net bonus = £476 (£700 -£140 - £84)

Some bonuses are also reduced by any applicable employer NI depending on the agreement;

£700 x 13.8/113.8 = £84 Employer NI

Gross Bonus = £616
Less IT at 10% = £123
Less: EE NIC at 12% = £74

Net bonus = £419 (£616 - £123 - £74)

There may be pension contributions deducted from this also.

[janig8]

£140 IT (20%)
£84 Class 1 NIC (12%)

Net bonus = £476 (£700 -£140 - £84)

Some bonuses are also reduced by any applicable employer NI depending on the agreement;

£700 x 13.8/113.8 = £84 Employer NI

Gross Bonus = £616
Less IT at 10% = £123
Less: EE NIC at 12% = £74

Net bonus = £419 (£616 - £123 - £74)

There may be pension contributions deducted from this also.

Thank you Adam! And further thanks for showing the maths, that really helped.

Have a good weekend.