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Income tax and tax brackets!

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nellypope | 11:10 Thu 26th May 2011 | Business & Finance
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If I earn £22pa (20%) tax bracket, but one month I suddenly earn LOADS in overtime and bonuses and that amount is more than £3000 per month, will I pay 40% tax on that one month? In other words, is your income tax bracket calculated on a monthly basis or yearly??
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The allowance is calculated on an annual basis overall.

But each month is for PAYE purposes treated pro rata,so you could land up paying 40% in a very good month and then get it back the next/following month

The amount has to be over £3740 before you pay higher rate tax - and then only on the excess, not on everything. Your (rough) figure of £3000 omits to take into account your personal allowance

And also it's cumulative - you'll get it back the following month if your annual allowance
Just check that you are not on a "month 1" PAYE code (sometimes signified by "X" or "M1" after the code. That could result in your being taxed excessively on the bonus (although probably not on the figures mentioned). You can still claim back the overpayment at the tax year end.
£22pa? I have to admire your work ethic in even bothering...

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Income tax and tax brackets!

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