Do I pay more tax when 2 extra payments are in this paypacket

Question

I recently worked about 17 hours of overtime in a weekend, submitted it and expected to be paid that month but I missed the cut off date apparently.

This is fine, but I will also be paid part of my bonus next month, so both the overtime, and the bonus will be in the same pay packet. Does this mean I will pay more tax/NI over all, or just more at once?

Some example figures to work with in case it helps:

• Say I earn £2200 a month before tax, £1800ish after.
• The OT is about £500, and bonus is about £700.

Answer 1

With a basic salary of £2,200 per month, anything extra will always be taxed at the basic rate or higher. But if you earn £3,400 in one month, that’s an annualised amount of £40,800, still well below the £50,000 higher-rate threshold, so there should be no risk of any of it being taxed at higher rate. Your National Insurance will also be the same, because you won’t go above the weekly threshold of £962 where the rate drops, but you’re always above the £166 weekly threshold for paying NI at all. So you should end up paying exactly the same PAYE tax and NI as you would have done if the extra payments were in two different months. (Note that even if you did end up paying more tax, you should get it back eventually, unless the payments would have been in two different tax years before one was delayed.)

Answer 2

Having lots of money lumped into one pay period rather than spread over several can cause more tax to be withheld, but should not increase the tax liability (which is how much you need to pay overall). So if, at the end of the year, you have more withheld then the tax due on your income, you should get that back as a refund