Morning all
I am employed full time in the nhs and our overtime is paid to us via an outside agency called nhsp. When we complete our overtime shifts they are uploaded to nhsp and we then "release" them for payment. Since this system started in December I have been saving up my hours with a view of cashing them all in together at the end of February so I only get taxed once instead of doing it say weekly.
A collegues has suggested if I do this I'll get clobbered quite heavily in tax due to the amount of hours worked ( ~150) so I would be better releasing it in smaller blocks of say 30 hours at a time. All of this is somewhat greek to me so wondered if anyone could offer some advice with this please?
Much appreciated 🙂
Both or neither really depends how well the system is set up. If you get taxed heavily in Feb then you can do a tax return in April to adjust it back and get it paid out.
They pre-empt your annual salary on what you get paid each month.
I.e. if you only ever earn £5k per year, but get it paid all in one month, you will pay the tax of a £60k / yr person. Butt...jut claim it via a tax return.
DrP
Depending on the payroll system you may go into the 40% bracket but then you will get a refund of tax in the following month assuming you're normally a standard rate tax payer and cash in your hours this month allowing for the tax correction in February.
If you are able to carry it across into the next tax year then you'll have a higher tax allowance so will pay less tax.
So if I've got this right it won't make a lot of odds either way as it will either balance itself next month or I do a tax return at the end of the financial year?
FWIW AFAIK I'm on standard tax rate, my salary is 15k if that helps? The overtime is paid seperately to my full time hours but dont know if it classes as a second income?
Thanks for replies so far 🙂
Do you receive one P60 for your employment which includes your normal plus overtime or do you receive one for each? If only one P60 then wat I described above will apply. On the other hand if you receive 2 P60s then you wil be taxed at basic rate on all your overtime which wouldn't need correcting in your next payroll.
If you the overtime took you above £817 gross per week you would only pay 2% on national insurance on the earnings above instead of 12% so that could be to you benefit.
We used to get a p60 for each, I'm guessing that would be the same now as we still get a seperate payslip for the overtime. Which would mean basic for both right?
Topping £800/wk would be nice but sadly not the case lol.
It may matter if you're paying off a student loan via PAYE
Your main payroll for your standard hours will use all your tax allowance. The secondary payroll for your overtime will be at basic rate. You won't be overtaxed on either.
Ok, thats cool. In that case I'll keep saving it up until end of feb as planned and bank it then 🙂