Tax on bonus payment

S

Suzierea

Registered User
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Hello i was just wondering i am recieving ,bonus of about 12500 soon and i know the week i get it i will be creased in tax. I am just curious will my tax credits decrease for rest of year. I earn roughly 45k before tax yearly so my tax credits stsy the same for the 52wks just curious how much damage this payment will do for year remaining.tbanks
 
your tax credits are apportioned over the year so your pay in the following month wont be impact however of that 12.5k you will see around 48% of it so 6k, as it will all be at your marginal rate plus prsi and usc.
 
Note of course that this amount of tax is due on any extra income.

It does not have to be a bonus.

It could be a payrise due to promotion, or simply extra hours.
 
Blackrock1 said:
your tax credits are apportioned over the year so your pay in the following month wont be impact however of that 12.5k you will see around 48% of it so 6k, as it will all be at your marginal rate plus prsi and usc.
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Intensely frustrating to see the taxman snaffle more of your hard-earned bonus than you will see yourself. You can of course console yourself that the Government will spend your money wisely and efficiently. Can't you?

Two practical ideas: max out your AVC contributions and check out EIIS investments.
And don't vote for leftwing politicians.

[broken link removed]
 
Got my bonus a while ago and we were given the option of taking 500 of it as a voucher (one4all, me2you) which is tax free.

Small Benefit Exemption

This page explains the small benefit exemption provided to employees
www.revenue.ie www.revenue.ie
 
jdwex said:
Got my bonus a while ago and we were given the option of taking 500 of it as a voucher (one4all, me2you) which is tax free.
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If your bonus was, say, €1,000 and you were given the choice of the full bonus or a bonus of €500 and the voucher, would AAM (or more specially, would Revenue) consider that one would be accepting the voucher in lieu of pay?
 
Itchy said:
If your bonus was, say, €1,000 and you were given the choice of the full bonus or a bonus of €500 and the voucher, would AAM (or more specially, would Revenue) consider that one would be accepting the voucher in lieu of pay?
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I was thinking the same under salary sacrifice rules, but it appears that it would still be exempt from income tax as a qualifying incentive. From TCA:

112B Granting of vouchers​

(1)In this section—

“benefit” means a tangible asset other than cash;

“qualifying incentive” means either a voucher or a benefit that is given to an employee by his or her employer in a year of assessment where the following conditions are satisfied:

(a)the voucher or the benefit does not form part of a salary sacrifice arrangement;

(b)the voucher can only be used to purchase goods or services and cannot be redeemed, in full or in part, for cash;

(c)the voucher or the benefit cannot exceed €500 in value;

(d)not more than one voucher or benefit can be given to that employee in any year of assessment;

“salary sacrifice arrangement” means any arrangement under which an employee forgoes the right to receive any part of his or her remuneration due under his or her terms or contract of employment and in return his or her employer agrees to provide him or her with a qualifying incentive.

(2)A qualifying incentive shall be exempt from income tax and shall not be reckoned in computing income for the purposes of the Income Tax Acts.
 
That's what I was getting at. If it's part of salary sacrifice, then it's not a qualifing incentive.

By giving the option to take one or the other you are foregoing the salary that would otherwise be due, in order to get the benefit. If there was no option then it would qualify I.e. the employer gives you the voucher and a bonus.

I thought I had read about this nuance before but I can't find anything just now.
 
a bonus is just more pay, if it were taxed less than regular pay then you could just ask for minimum wage and the rest as a big bonus at the end of the year to reduce your tax bill. Some jobs the bonus is a huge proportion of the overall renumeration anyway, so it would be ripe for abuse.

You can reconcile your tax at the end of the year and if you've overpaid tax because of the bonus, you'll get it back.
 
Blackrock1 said:
how so?
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Okay yes, there is a tax saving. It applies to pension contributions of earned income regardless whether it's salary or bonus.

The distinction I'm trying to make is: it applies equally to salary and bonus.

Let's say I earn 10k salary plus 10k bonus

I put 10k into pension and save tax

Is that 10k saving tax on my bonus? Or on my salary?

The pension contribution saving works on any income: bonus or regular income.
 
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