UKC

Corporate bonuses - what tax rate?

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adderz 12 Aug 2008
what tax rate get applied to bonuses? does it depend on what income tax bracket you are? if so what are the rates?
 andy 12 Aug 2008
In reply to adderz: D'you mean an annual performance bonus? If yes, then it'spart of your salary so you pay tax at whatever your top rate is (once your bonus is taken into account). Sorry if i'm being dim and not understanding...
adderz 12 Aug 2008
In reply to andy:

sorry my question may not have been that clear.
bonus is completely separate to pay, i.e. the yearly bonus.
so i take it if you're a top rate payer you'll pay 40% on the bonus?
 stubbed 12 Aug 2008
In reply to adderz:

Yes
 ClimberEd 12 Aug 2008
In reply to adderz:

it's just considered income in the eyes of the tax man - it's only 'separate to pay' from your perspective
 2pints 12 Aug 2008
In reply to adderz:

Even if you're not quite a higher-rate taxpayer, if this bonus pushes you over then you'll pay 20% on the amount upto the higher rater threshold and then 40% on the rest

HTH
 andy 12 Aug 2008
In reply to andy: Or indeed quarterly/monthly bonus - if it's income it's taxed as such. Only difference are things like deferred shares which are taxed when you get them. My bonus scheme gives me the option to instruct the trustees to sell enough shares to cover the tax liability when they're released (3 years) - which won't be much as I work for a bank!!

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