Overtime and stoppages.

In short I have worked overtime recently and I am shocked at the amount of stoppages when paid. It appears that the more hours overtime i do, the more i lose?

Can anyone explain this in simple terms, I have not much knowledge in this area.

do you mean stoppages in tax and ni contributions?

Only part of your income is taxed- the first £10 000 is tax free depending on your Tax Code.

As overtime is above this threshold you will pay full tax/pension/NI on your overtime.

Time off in lieu is not taxable.

Overtime isn't always pensionable (in fact most cases it isn't). It's defo tax and NI able though. So basically the more you earn - the more tax and NI you have to pay.

Overtime isn't always pensionable (in fact most cases it isn't). It's defo tax and NI able though. So basically the more you earn - the more tax and NI you have to pay.

What the OP is observing is not a gradual increase in deductions.

What they observe is a larger percentage of deduction on the overtime pay than on their normal pay.

The percentage of deduction on the overtime pay is higher because the tax relief on the first £10 000 has been used. It may be mitigated by no/less pension contribution but this will have less effect for most.

To complicate things NI rates also change.

Poss gone in to higher tax band after overtime.

Just a guess, why don't you ask accounts?

In short I have worked overtime recently and I am shocked at the amount of stoppages when paid. It appears that the more hours overtime i do, the more i lose?

 

Can anyone explain this in simple terms, I have not much knowledge in this area.

Welcome to the year of the general election. Whoever you vote for comes at a price. Politicians of all persuasion love to spend money...and that money comes from your 'stoppages'.

So when a politician says 'those who can afford to pay more, should' they have no idea what that means in the real world...a disincentive to work longer hours to provide for you and your family, a disincentive for someone to risk their house to start a business, creating job opportunities and wealth for the country; the two things we need a lot more of right now!