To do overtime or not?

9
Found 19th Apr 2012
So here is the situation. My previous payslip I was earning on the limit of the tax free allowance and so only paid NI tax. The past few weeks I did a load of overtime to earn extra £££$$£$£$£$. However, I received my payslip today and found out I had earnt pretty much the same as the previous payslip. In essence the overtime I did was all taxed away.

Would it be worth it continuing to do OT if asked by my boss or should I just stick to my contracted hours? I am already pretty close to the 39 hour weekly limit (set by the place I work for) and cannot really force through even more OT.
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40 hours and you earn 7500?

how would that work though? you only pay tax on earnings above the threshold, so if you earn 100 extra, you should pay £20 tax on that.. and the rest tax free

(i think)
aint that resetted now for this year?

Whats the % for NI tax?


jackvdbuk

40 hours and you earn 7500? how would that work though? you only pay tax … 40 hours and you earn 7500? how would that work though? you only pay tax on earnings above the threshold, so if you earn 100 extra, you should pay £20 tax on that.. and the rest tax free (i think)


Roughly 5% but depends on your earnings.
Even if you did 30 hours a week and earned £7500 a year, that would be £4.80 an hour.??
Edited by: "rdtorres" 19th Apr 2012
New tax limit is £8105, and essentially jackvdbuk is right, you will only be taxed on earnings over the limit, however, the revenue work out how much to tax you assuming you get paid the same amount for the remainder of the financial year, kind of on a pro rata basis, so on this occasion you may have been overtaxed and a tax refund/reduction will follow.

Yeah, the new financial period just started. Plus it was the first period that I done a far bit of overtime. Assuming I dont do OT (only my contracted hours) again for the rest of the year, would they still continue to tax me using the amount I earnt from the first period as a guide?

Badders256

New tax limit is £8105, and essentially jackvdbuk is right, you will only … New tax limit is £8105, and essentially jackvdbuk is right, you will only be taxed on earnings over the limit, however, the revenue work out how much to tax you assuming you get paid the same amount for the remainder of the financial year, kind of on a pro rata basis, so on this occasion you may have been overtaxed and a tax refund/reduction will follow.


It sounds like you started your job well after the beginning of the previous tax year, having previously not earned in the year, so were effectively earning more take-home than you will this year. If you don't do the overtime, you will find yourself earning quite a bit less than you were in previous months.

For each hour overtime you do, you will effectively earn your hourly overtime wage minus 37% (tax and NI). NI is 12% of weekly earnings over £146.
Edited by: "jah128" 19th Apr 2012
jah128

It sounds like you started your job well after the beginning of the … It sounds like you started your job well after the beginning of the previous tax year, having previously not earned in the year, so were effectively earning more take-home than you will this year. If you don't do the overtime, you will find yourself earning quite a bit less than you were in previous months.For each hour overtime you do, you will effectively earn your hourly overtime wage minus 37% (tax and NI). NI is 12% of weekly earnings over £146.



This sounds about right to me.

So say you earn £2000 a month, but only started in January, you would not have earned over the tax threshold in Jan-Mar, so you would pay no tax (or if you did it is reclaimable).
But for April, even though you stil earn the same, because it is assumed you will work 12 months at this rate (12 x 2000 = £24,000), you will start paying tax immediately rather than wait until you have reached the threshold level. If you do not work the 12 months then you will be able to reclaim the extra tax!

So your April payslip will have tax on your basic earnings for the first time, but it is less clear because you also have OT in there too. As a rough guide, for every £1 on OT you are paid, the government will claim near enough 40p (or 37% as jah128 reckons above).

If you company has a payroll person, ask to speak with them. They may well be delighted to take you through the figures for your payslips - a welcome distraction from their usual humdrum stuff.
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