Overtime

System
System Posts: 100,537 🤖 Admin 🤖
edited 10:26AM in Student community
Hi Guys,

I have just started working overtime at work. I thought it would just get added to my annual salary figure and I'd pay the same tax level providing I don't go into the next tax bracket.

However, one of the supervisors on my team who has done AAT, advised me to be careful of the amount of overtime I do as it is taxed differently.

Is someone able to shed some light on this please?

Overtime rates are 1.5 times once your 37.5 hours has been worked and double time on a sunday.

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Overtime

    Hi

    You are right. When getting paid overtime, this will just be added to your salary, and taxed at the according rate, for tax and national insurance.

    I'd like to know your supervisor's explaination of how overtime is 'taxed differently'!

    Hope this helps

    Tom

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Overtime

    Thanks Tom. My supervisor didn't give an explanation, she just said that there gets to a point with overtime where you lose too much on tax to make it worth while.
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Overtime

    Sounds like the classic "I've been on a course and a little knowledge is a dangerous thing" syndrome!

    Even if you did tip over into the next bracket, you're still only going to lose 40% to the taxman. Depends on your own definition of whether that would still be worth it, I suppose!

    Maybe they were getting confused with certain government tax/family credits where the more you earn, the less you get back in your allowances, effectively nullifying the extra hard work you put in?

    Robert
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Overtime

    Overtime is NOT taxed any differently than your usual salary/wages. I'm not sure where your supervisor has heard this information but I can only assume it could be "bar room" chat. The tax rates do go into higher brackets if you earn above £33,300 after the personal allowance during this current tax year.

    Kind regards
    Steve

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