Due bonus in February, how is tax calculated on bonus??

R

rosie

Guest
I am due to get a bonus from work in February and can't figure out how they will tax me, do they tax you per month? So my basic net gross pay plus bonus and then tax me?
 
Hi Rosie

They will add your gross bonus to your gross basic salary and this will be your taxable pay for February. In practice, if your normal basic brings you into the 42% tax band, your bonus will all be taxed at 42% tax and 6% prsi.

Brendan
 
Brendan said:
Hi Rosie

They will add your gross bonus to your gross basic salary and this will be your taxable pay for February. In practice, if your normal basic brings you into the 42% tax band, your bonus will all be taxed at 42% tax and 6% prsi.

Brendan
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Unless, (as unlikely as it may be and it applies more to a bonus at the end of the year), your bonus mapyment brings you above the PRSI threshold so that you will only pay 2% health levy on all or part of the bonus.
 
Add the gross bonus to your normal annual gross salary and enter the total amount into [broken link removed] to see what effect it has.
 
Some companies allow employees to purchase shares in the company. If so you purchase the shares at the current market value but don't pay any tax on the bonus provided the shares are held for 3 years. The shares can rise or fall during this period. Not really an option unless the shares are actively traded on some stock exchange.
You are liable for CGT as a result in any increase in market value during this three year period subject to an increase of 1270.
You could also consider putting the bonus into a pension scheme. Also no tax payable but can't access the funds until you retire.
 
Doesn't this also only apply to Revenue approved share schemes which are fairly rare as far as I know? A pension top-up might also be an option to avoid tax and PRSI (employee and employee if paid via payroll) on the bonus. If the employer paid it directly into your pension then they would save the 10.75% (?) employer PRSI and might be amenable to sharing some of this "saving" with you to inflate the bonus. I am assuming that you are not already maximising your contributions to avail of your full age related pension tax relief limit.
 
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