Bonuses, bonuses.

Bonuses

Companies are increasingly replacing raises with bonuses—a trend that vexes many employees. While employers can keep wage increases low by pledging to fill pay gaps with bonuses, they are under no obligation to follow through.

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Because employers pay bonuses on a discretionary basis, they may keep their fixed costs low by withholding bonuses during slow years or recessionary periods. This approach is much more viable than increasing salaries annually, only to cut wages during a recession. While bonuses are traditionally issued to high-performing, profit-generating employees, some companies opt to issue bonuses to lower-performing employees as well, even though businesses that do this tend to grow more slowly and generate less money. Some businesses resort to distributing across-the-board bonuses in an effort to quell jealousies and employee backlash. After all, it's easier for management to pay bonuses to everyone than to explain to inadequate performers why they were denied.

Bonus

What is a bonus?

A bonus is a financial compensation that is above and beyond the normal payment expectations of its recipient. Companies may award bonuses to both entry-level employees and to senior-level executives. While bonuses are traditionally given to exceptional workers, employers sometimes dole out bonuses company-wide to stave off jealousy among staffers.

Bonuses may be dangled as incentives to prospective employees and they can be given to current employees to reward performance and increase employee retention. Companies can distribute bonuses to its existing shareholders through a bonus issue, which is an offer of free additional shares of the company's stock.

Key takeaways

• A bonus is a financial compensation that is above and beyond the normal payment expectations of its recipient.


• Bonuses may be awarded by a company as an incentive or to reward good performance.


• Typical incentive bonuses a company can give employees include signing, referral, and retention bonuses.


• Companies have various ways they can award employee bonuses, including cash, stock, and stock options.

Understanding bonuses

In workplace settings, a bonus is a type of compensation an employer gives to an employee that complements their base pay or salary. A company may use bonuses to reward achievements, to show gratitude to employees who meet longevity milestones, or to entice not-yet employees to join a company's ranks.

The internal revenue service (IRS) considers bonuses as taxable income, which means employees will need to report any bonuses they receive when filing their taxes.  

Incentive bonuses

Incentive bonuses include signing bonuses, referral bonuses, and retention bonuses. A signing bonus is a monetary offer that companies extend to top-talent candidates to entice them to accept a position—especially if they are being aggressively pursued by rival firms. In theory, paying an initial bonus payment will result in greater company profits down the line. Signing bonuses are routinely offered by professional sports teams attempting to lure top-tier athletes away from competitive clubs.

Referral bonuses are presented to employees who recommend candidates for open positions, which ultimately leads to the hiring of said candidates. Referral bonuses incentivize employees to refer prospects with strong work ethics, sharp skills, and positive attitudes.

Companies offer retention bonuses to key employees, in an effort to encourage loyalty, especially in downward economies or periods of organizational changes. This financial incentive is an expression of gratitude that lets employees know their jobs are secure over the long haul.

Performance bonuses

Performance bonuses reward employees for exceptional work. They are customarily offered after the completion of projects or at the end of fiscal quarters or years. Performance bonuses may be doled out to individuals, teams, departments, or to the company-wide staff. A reward bonus may be either a one-time offer or a periodic payment. While reward bonuses are usually given in cash, they sometimes take the form of stock compensation, gift cards, time off, holiday turkeys, or simple verbal expressions of appreciation.

Examples of reward bonuses include annual bonuses, spot bonus awards, and milestone bonuses. Spot bonuses, which reward employees who deserve special recognition, are micro-bonus payments, typically valued at around $50. Workers who reach longevity milestones—for example, 10 years of employment with a given firm—may be recognized with additional compensation.

Some businesses build bonus structures into employee contracts, where any profits earned during a fiscal year will be shared amongst the employees. In most cases, C-suite executives are awarded larger bonuses than lower-level employees.

Bonus inflation

While bonuses are traditionally issued to high-performing, profit-generating employees, some companies opt to issue bonuses to lower-performing employees as well, even though businesses that do this tend to grow more slowly and generate less money. Some businesses resort to distributing across-the-board bonuses in an effort to quell jealousies and employee backlash. After all, it's easier for management to pay bonuses to everyone than to explain to inadequate performers why they were denied.

Furthermore, it can be difficult for an employer to accurately assess their employees' performance success. For example, employees who fail to make their activity quotas may be very hard workers. However, their performance may be hampered by any number of conditions out of their control, such as unavoidable production delays or an economic downturn.

Bonuses in lieu of pay

Companies are increasingly replacing raises with bonuses—a trend that vexes many employees. While employers can keep wage increases low by pledging to fill pay gaps with bonuses, they are under no obligation to follow through. Because employers pay bonuses on a discretionary basis, they may keep their fixed costs low by withholding bonuses during slow years or recessionary periods. This approach is much more viable than increasing salaries annually, only to cut wages during a recession.

Dividends and bonus shares

In addition to employees, shareholders may receive bonuses in the shape of dividends, which are carved from the profits realized by the company. In lieu of cash dividends, a company can issue bonus shares to investors. If the company is short on cash, the bonus shares of company stock provide a way for it to reward shareholders who expect a regular income from owning the company's stock. The shareholders may then sell the bonus shares to meet their cash needs or they can opt to hold onto the shares.

Bonuses for employees

Bonuses have been a staple of employee pay packets for decades

They can help attract and retain staff who value financial incentives at work — which, let’s face it, is most people. And performance-related bonuses can help to keep staff engaged, by promising a higher level of reward for stronger performance.

But are bonus schemes really for everyone? And what’s the best way to set one up and manage it?

Which companies use bonus schemes, and why?

Bonus schemes are very widely used in the UK. More than half of organisations use at least one performance-related reward or incentive scheme. Almost 60% operate individual bonuses, making that the most common type of scheme. And around 50% of companies also expect to increase their variable pay spend in the near future.

But bonuses aren’t favoured by organisations in every sector — nor for every kind of employee. In private sector services, where employees often have individual sales targets, nearly 70% of companies use individual bonuses. In non-profit sectors, the percentage is just 45%. Management and professionals are also 13% more likely to be offered bonuses than other employees (CIPD 2013).

The common thread? Bonus schemes are considered most effective where an employee or team’s performance is measurable and financially significant.

Contractual vs discretionary bonus schemes

If you decide to operate an employee bonus scheme, a key decision is whether to make it contractual or discretionary.

1. Contractual: as the name suggests, contractual bonus schemes are written into the contract. You have no discretion on whether to pay a bonus — if the employee has earned it, you must pay it in accordance with the contract terms.


2. Discretionary: discretionary schemes aren’t written into the contract, so you have more flexibility in adjusting terms and bonus amounts.


3. Mixed: most employers take a best-of-both approach, offering employees a contractual right to join the bonus scheme but keeping bonus sums at their discretion.

Group, non-cash and other incentives

Individual cash bonuses aren’t the only type of incentive scheme available to you. You can also consider:

1. Group incentives: when individual performance is not your focus, you can base your bonus scheme on other criteria such as overall business results, team performance, project outcomes and others.


2. Non-cash incentives: offering merchandise (e.G. Electronics or watches), activities (e.G. Nights out), travel or retail vouchers can tie in with team building and other goals. Non-cash incentives can also offer more value than cash when purchased in bulk at low cost.

Tax rules on bonuses

Both cash and non-cash bonuses you pay to employees are subject to tax and national insurance.

Tax and NI on cash bonuses

As far as HMRC is concerned, cash bonuses you pay to employees are no different to regular pay. You should count bonus pay and non-variable pay as one sum, and deduct PAYE tax and national insurance contributions as normal.

Tax and NI on non-cash bonuses

There are many types of non-cash bonus you can offer, from mobile phones to caribbean holidays. Unfortunately, many different tax and reporting rules also apply. For example, voucher values are added to the employee’s earnings at the cost you paid for them. Always check the latest HMRC guidelines.

Bonuses

Payment of bonuses

André claassen and jan du toit

It must be understood that labour law is silent on the question of bonuses. This means that the payment or non-payment of bonuses is a matter entirely for the employer to decide, and to negotiate with employees. If an employer who presently does not pay bonuses of any sort wishes to continue on that route he can do so, without fear of being accused of unfair labour practice.

It is important to note that certain bargaining council agreements do make provision for the payment of bonuses. In the case of bargaining council and collective agreements employers will have to respect these agreements.

However in the case of the employer who presently pays bonuses the situation is slightly different because those employees have now come to expect the payment of the bonus as a right or entitlement. It is essential that in every employment contract, the terms and conditions applicable to the payment of bonuses must be specifically and clearly stated, even to the extent that if it is a company policy not to pay bonuses of any sort, this fact must also be stipulated in the employment contract.

Therefore, those employers who now wish to change the status quo regarding payment of bonuses, either by paying less, or by paying at the different time of the year than what has been the case in the past, or by splitting what was an annual bonus into two separate payments, will have to consult with the employees, explain the problems, and try to get them to accept the new system.

Employers must remember that such changes do constitute a change to the employee’s terms and conditions of employment, and this cannot be done unilaterally - it must be negotiated with the employee.

The bottom line is that should the employees refuse to accept the change, but the employer has good, sound and reasonable commercial rationale for making the change, then he can go ahead and implement it after negotiations, even if all employees do not agree to it.

This is not to say that a few disgruntled employees will not proceed with a claim of unfair labour practice, but that is a problem that will not prove to be insurmountable.

In summary, be fair, be equitable and advise your employees in good time if there is to be a problem with the payment of bonuses or if there is to be a departure from the established payment procedures.

We will deal with the three common types of bonus, namely the christmas bonus or 13th cheque as it is known, the performance bonus and the production bonus.

The 13th cheque or christmas bonus

This bonus is normally classed as a gratuity - in other words, a payment of gratitude by the employer to the employee in recognition of a job well done, or if you like, going the extra mile.

However, over the years most employees have come to expect the payment of the 13th cheque as a right or entitlement, or as a condition of employment. This is evidenced by the fact that at job application interviews most applicants will ask "do you pay a 13th cheque?”. In other words, they expect to be paid a 13th cheque irrespective of whether the job is well done or irrespective of whether they go the extra mile. They want the payment of a 13th cheque to be incorporated as a condition of employment.

It is therefore up to the employer to get things back onto a proper footing. Many employers these days have done away with the payment of a 13th cheque and have incorporated the amount into the employee’s basic salary.

In those instances where the bonus has been consistently paid over previous years, whether a contractual condition exists or not, the employee has undoubtedly developed a very strong right of expectation that the bonus will also be paid in the current year. Having been given no indication to the contrary, the employee's right of expectation is even stronger, and when the employee is suddenly informed by means of a letter attached to his pay slip that there will be no bonus this year, or until he discovers it himself by visiting the bank, trouble looms for the employer.

It is definitely unfair of the employer to decide unilaterally not to pay bonuses, and in addition to either not advise the employee at all, or advise the employee at the last possible minute.

Whilst the right of expectation does not actually afford the employee the absolute right to demand and to be paid the bonus, it certainly does afford him the right to be heard before the decision not to pay the bonuses is made by the employer.

This would imply then that the employer should consult with employees if it is found that, for any legitimate reason or sound commercial rationale, the bonuses cannot be paid in a particular year, or if the amount of the bonus is to be to be less than the amount consistently paid in the past, or less than the contractual amount. Remember that company policy is invariably construed to form part of the employment contract. Employees are entitled to put their side of the story, and it cannot be denied that this opportunity is a fundamental requirement of "fair procedure."

It cannot be accepted, by any stretch of the imagination, that an employer suddenly discovers only on shut-down day that company profitability disallows the payment of bonuses for this year, or he suddenly discovers on shut-down day that employees have not been performing and therefore the payment of bonuses this year is not justified and so on.

The message here is that the management of any company must surely be aware by the middle of the year whether or not profitability, staff performance, or whatever other criteria exist, may endanger or even prevent the payment of the relevant bonuses for that year.

It is the duty of management (and it is only fair) to consult with the staff at the earliest possible moment, to warn them of this possibility that bonuses may not be paid or may be reduced this year, or if necessary take the extreme precaution of informing staff categorically that no bonuses will be paid for that year. If it is later possible to pay the bonuses, then it will be a pleasant surprise for all employees.

The reasoning of management that if the non-payment of bonuses is only made known on shut-down day, or if they remain silent and let the employee discover the non-payment for themselves, there is nothing the employees can do until the company re-opens in january, by which time the employees will have “cooled off” anyway, and are unlikely to raise the issue.

That kind of thinking is irresponsible and it does not solve the problem, it only postpones it until next year.

If employers cannot be fair to their employees with regard to the payment of benefits that employees have right to expect, either contractually or otherwise, then the employer cannot expect those employees to be fair to him.

There is no greater impediment to productivity in this country than disgruntled employees.

The performance bonus

A performance bonus is normally paid for good performance, and should be based as a percentage of the employee’s salary or wages. A performance bonus can also be paid as a lump sum to a department, and split up in equal amounts to each employee in that department.

This would apply in the situation where all employees in a particular department are collectively responsible for above-average performance. The performance would be measured against laid down company standards, but the bonus would not be paid only for the occasional work done which exceeds company standards, but for consistent work exceeding company standards.

This means that line management and the shop foremen and even supervisors have to become much more closely involved with the monitoring of performance on the shop floor and careful records must be kept.

In a situation where the results achieved by a department depend entirely on the collective effort of all employees in the department, the amount of the bonus could be calculated on the basis of a percentage of profits achieved over and above what was budgeted for, or as a percentage of the total profits generated by the department and so on. Whatever the case, the method of calculation must be fair and equitable.

The production bonus

The production bonus is based, not on performance measured against company standards, but rather on production measured against targets. Measurement is also based on quality of production.

In other words if the company has set a target for one particular employee or, for that matter, for a particular department to produce 100 widgets per hour, and the employee or department consistently produce 130 widgets per hour, then a production bonus would be justified.

Similarly, if the company rule is that a rejection rate of 5 percent is acceptable, but the department consistently achieves a rejection rate of only 1%, then a production bonus would be in order.

It must be admitted that the additional production and the reduced rejection rate can only mean good management within the department, and it can only mean a genuine interest in the job by the employees, thus generating additional profits for the shareholders.

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Bonuses for employees

Bonuses have been a staple of employee pay packets for decades

They can help attract and retain staff who value financial incentives at work — which, let’s face it, is most people. And performance-related bonuses can help to keep staff engaged, by promising a higher level of reward for stronger performance.

But are bonus schemes really for everyone? And what’s the best way to set one up and manage it?

Which companies use bonus schemes, and why?

Bonus schemes are very widely used in the UK. More than half of organisations use at least one performance-related reward or incentive scheme. Almost 60% operate individual bonuses, making that the most common type of scheme. And around 50% of companies also expect to increase their variable pay spend in the near future.

But bonuses aren’t favoured by organisations in every sector — nor for every kind of employee. In private sector services, where employees often have individual sales targets, nearly 70% of companies use individual bonuses. In non-profit sectors, the percentage is just 45%. Management and professionals are also 13% more likely to be offered bonuses than other employees (CIPD 2013).

The common thread? Bonus schemes are considered most effective where an employee or team’s performance is measurable and financially significant.

Contractual vs discretionary bonus schemes

If you decide to operate an employee bonus scheme, a key decision is whether to make it contractual or discretionary.

1. Contractual: as the name suggests, contractual bonus schemes are written into the contract. You have no discretion on whether to pay a bonus — if the employee has earned it, you must pay it in accordance with the contract terms.


2. Discretionary: discretionary schemes aren’t written into the contract, so you have more flexibility in adjusting terms and bonus amounts.


3. Mixed: most employers take a best-of-both approach, offering employees a contractual right to join the bonus scheme but keeping bonus sums at their discretion.

Group, non-cash and other incentives

Individual cash bonuses aren’t the only type of incentive scheme available to you. You can also consider:

1. Group incentives: when individual performance is not your focus, you can base your bonus scheme on other criteria such as overall business results, team performance, project outcomes and others.


2. Non-cash incentives: offering merchandise (e.G. Electronics or watches), activities (e.G. Nights out), travel or retail vouchers can tie in with team building and other goals. Non-cash incentives can also offer more value than cash when purchased in bulk at low cost.

Tax rules on bonuses

Both cash and non-cash bonuses you pay to employees are subject to tax and national insurance.

Tax and NI on cash bonuses

As far as HMRC is concerned, cash bonuses you pay to employees are no different to regular pay. You should count bonus pay and non-variable pay as one sum, and deduct PAYE tax and national insurance contributions as normal.

Tax and NI on non-cash bonuses

There are many types of non-cash bonus you can offer, from mobile phones to caribbean holidays. Unfortunately, many different tax and reporting rules also apply. For example, voucher values are added to the employee’s earnings at the cost you paid for them. Always check the latest HMRC guidelines.

Lloyds bank group cancels staff bonuses after profits slump

Profits were already down 85% to £434m in first nine months of the year

A sign outside lloyds banking group headquarters in london. The bonus cancelation covers halifax and RBS too. Photograph: nick ansell/PA

A sign outside lloyds banking group headquarters in london. The bonus cancelation covers halifax and RBS too. Photograph: nick ansell/PA

Last modified on fri 18 dec 2020 19.19 GMT

Lloyds banking group has cancelled staff bonuses for 2020 after missing financial targets and recording a sharp drop in profits during the covid crisis.

The bank told staff across its halifax, lloyds and bank of scotland brands on thursday that it was making an early announcement on bonuses in light of the challenging economic outlook, and with profits already down 85% to £434m in the first nine months of the year.

Last year lloyds cut its bonus pool for the first time in four years to £310m, down from £465m in 2018.

The bank told staff in a memo: “despite the good news about the vaccine rollout, like most of our peers, our year-to-date business performance continues to be challenging.” despite reporting a third-quarter profit, lloyds told employees: “we are not where we expected to be and are short of the commitments we made to ourselves and our shareholders – which I know also includes many of you.”

The decision has not changed fortunes for the chief executive, antónio horta-osório, who is set to leave in june 2021 and confirmed earlier this year that he would waive his 2020 bonus, worth as much as £1.8m. William chalmers, the finance chief, also ruled himself out of a payout worth up to approximately £800,000.

The decision to cancel bonuses means lloyds will avoid uncomfortable questions from UK regulators, which said last week they would be scrutinising cash bonuses for bankers in light of the continued economic uncertainty.

But the cancellation could prove controversial, if the bank decides to pay shareholders dividends in the new year. The bank of england last week lifted its temporary ban on dividend payouts to investors, but told lenders a cap would be imposed until at least mid-2021.

The coronavirus pandemic has put pressure on bank earnings. Record low interest rates have squeezed net interest income, which measures the difference between interest earned on loans v that paid on deposits. The deteriorating economic outlook has also forced lloyds to put aside £4.1bn so far to cover potential defaults on loans and credit cards.

Lloyds has also announced almost 2,000 job losses since september as part its restructuring plans.

Accord, a specialist union for staff in financial services, said: “bad news is bad news and the lack of any group performance share [bonus] will give some individuals real problems next year when many family budgets are already stretched.”

However, unions have reached a tentative agreement to increase salaries by at least 1% for about 80% of lloyds banking group staff. The lowest-paid workers will be guaranteed a pay rise of at least £400.

Lloyds is also considering distributing shares to employees in the new year in lieu of a bonus, and earlier this year paid one-off bonuses worth £250 to frontline staff who had worked through the pandemic.

The group said: “this decision on bonuses in no way reflects the hard work and commitment our people have made throughout this extraordinary year to keep our businesses operating strongly and to provide support and help to our consumer and business customers.”

Casino bonuses

Casino bonuses come under different forms, from registration bonuses to bonuses made available around special events. There are a few bonus types that are popular among casinos, such as deposit bonuses, free spins & no deposit bonuses, reload bonuses or cashback bonuses.

Below you will find a list of top casino bonuses:

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Types of casino bonuses

• Casino deposit bonus – deposit bonuses are offered as matched bonus values based on first deposit or over several cash deposits made by the player on the casino website. The deposit bonus has a matching value (presented in percentage by the casino) and a maximum value. Deposit bonuses can be used to play games from the casino lobby. Bonuses and winnings from deposit bonuses can not be withdrawn by users until the turnover requirements set by each individual casino have been meet. Different turnover requirements may apply based on the game played.


• Casino spins bonus – casino spins (also know in some countries as free spins) may be offered by some casinos as a bonus on a cash deposit, or it can complement a deposit bonus offer. The casino spins are clearly limited in number, and they can be used to play only on selected slot games. Winnings from casino spins may be returned as bonus money, which means players can not make a cash withdrawal until turnover requirements for the bonus have been meet.

These are the most popular types of casino bonuses. As a player, you may find different names for these bonus types, with various ways of using them, and it all depends by each casino website as they organize their promotions and welcome bonuses. But in the end, the mechanics of the bonus and turnover requirements are similar.

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How bonuses are taxed

The bonus tax rate for 2020 and 2021

Hill street studios/getty images

Everyone appreciates being recognized for their work, and it can be especially gratifying when that recognition comes in the form of a bonus. Unfortunately, the internal revenue service (IRS) will have its hand out for some of that cash. Your bonus will most likely take a bit of a hit in the form of tax withholding at the time you receive it.

The good news is that you might get a portion of that money back when you file your tax return. It’s no different from over-withholding from your paychecks during the course of the year. The IRS will issue you a refund for any excess.

Bonuses are supplemental wages

The IRS classifies bonuses as “supplemental wages,” along with severance pay, taxable fringe benefits, vacation pay, back pay, and overtime. Supplemental pay is pretty much anything other than your regular pay, and it’s subject to its own withholding rules. These rules depend to some extent on how your employer pays you the money.  

Bonuses might be subject to their own withholding rules, but they’re treated just like your other ordinary income at tax time when you file your return. They’re included in your taxable income—what’s left after you claim the various deductions and credits you’re entitled to—and tax brackets and their applicable rates are based on that income.

How are bonuses taxed?

Your employer has two options when it comes to calculating how much to withhold: the percentage method or the aggregate method. The percentage method is a flat 22%. No other percentage can be used.  

These two methods are used to calculate federal tax. Your bonus and any other supplemental wages you receive are subject to social security, medicare, and FUTA taxes.

The percentage method

Your employer can simply withhold the flat 22% that’s applicable to all supplemental wages under $1 million. This rate was put in place after 2017 and is expected to be in effect until the end of 2025, which means it’s applicable for tax year 2020 (which you file in 2021), as well as tax year 2021 (which you file in 2022). The IRS refers to this option as the “percentage method.” so, for example, if you receive a bonus of $3,000, this would result in a withholding of $660.

This rate applies even if your regular wages fall into a tax bracket that’s greater or less than 22%.

The aggregate method

This option is more complicated, as the name suggests. Withholding based on the aggregate method is first calculated on your regular pay plus your bonus pay, based on the information you provided to your employer on your form W-4 and the IRS withholding tables.

Now, the same rate of withholding is calculated on just your regular income. This figure is then subtracted from the withholding on the total combined amount of regular income and bonus and the result is then withheld from your bonus.

Let’s say your regular pay is $1,000 and withholding on that pay is $50. Your employer then gives you a $3,000 bonus, all in one paycheck. It works out like this:

You're now subject to $300 withholding on the total combined wage and bonus income of $4,000. Your employer would subtract your regular withholding of $50 from that $300 and would then withhold the balance of $250 from your $3,000 bonus.  

The aggregate and percentage method calculations apply only to federal income tax. The usual withholding rates for social security and medicare also apply to bonuses, as well as any state or local income tax you might be subject to.

Tax treatment of huge bonuses

Now let’s assume that your employer just thinks so insanely high of you that they and the company decide to give you a $1.5 million bonus.

The first $1 million is subject to the 22% withholding rate that applies to bonuses and supplemental wages paid in the 2020 tax year. Just like that, your bonus shrinks to $1.28 million because $220,000 goes to the IRS right off the top. The $500,000 you received over $1 million is subject to withholding at the rate of the highest tax bracket for that year—37%. That’s another $185,000 that goes directly to the IRS.  

Your total withholding on that $1.5 million works out to $405,000: $220,000 at the 22% rate, plus $185,000 at the 37% rate, leaving you with $1,095,000.

Are there exceptions to these tax rules?

These methods don't apply when you receive your bonus lumped together with your regular pay, all in one check, and your employer doesn’t specifically make note that the bonus amount is separate and apart from your regular pay. The total—your bonus plus regular wages—is subject to withholding just as though it was all your regular pay in this case.

Otherwise, your employer must use either the percentage method or the aggregate method to calculate withholding.

Incentive payments are different

Incentive payments aren’t considered to be regular income reported on form W-2 so they’re subject to different rules. They're reported in box 3 on the 1099-MISC form as "other income," not on form W-2 with other wages and payments from which taxes are withheld.

These payments are most common in the auto industry when the auto manufacturer—not the dealership—issues a monetary award to salespersons.

Income tax isn’t withheld from incentive payments, although they’ll be included with your taxable income when you prepare your tax return. You don't have to pay social security or medicare taxes on incentive payments, either.

Which method of tax withholding on bonuses is best?

Generally speaking, the percentage method is a lot easier. As for which benefits you—the employee—the most, it might come down to your tax bracket.

The withholding on your bonus is going to be more using the aggregate method if you’re in a tax bracket that is higher than 22%, such as the 24% or 32% bracket. It's something of a wash if you're in the 22% bracket. And if you’re in the 12% bracket? Ask your employer to use the aggregate method.

What if too much tax is withheld from your bonus?

So let’s say that you prepare your tax return and it turns out that what was withheld from your bonus was way too much based on your end-of-year tax rate on your taxable income. The IRS will issue you a refund for the money withheld from your bonus if it turns out that the 22% rate was too much based on your overall income at year’s end.

Your form 1040 tax return would show an overpayment of taxes, just as it would if you overpaid through withholding from your regular wages. The IRS refunds any difference between the balance you paid in over the year and what your tax return determines that you actually owe.

Lloyds bank group cancels staff bonuses after profits slump

Profits were already down 85% to £434m in first nine months of the year

A sign outside lloyds banking group headquarters in london. The bonus cancelation covers halifax and RBS too. Photograph: nick ansell/PA

A sign outside lloyds banking group headquarters in london. The bonus cancelation covers halifax and RBS too. Photograph: nick ansell/PA

Last modified on fri 18 dec 2020 19.19 GMT

Lloyds banking group has cancelled staff bonuses for 2020 after missing financial targets and recording a sharp drop in profits during the covid crisis.

The bank told staff across its halifax, lloyds and bank of scotland brands on thursday that it was making an early announcement on bonuses in light of the challenging economic outlook, and with profits already down 85% to £434m in the first nine months of the year.

Last year lloyds cut its bonus pool for the first time in four years to £310m, down from £465m in 2018.

The bank told staff in a memo: “despite the good news about the vaccine rollout, like most of our peers, our year-to-date business performance continues to be challenging.” despite reporting a third-quarter profit, lloyds told employees: “we are not where we expected to be and are short of the commitments we made to ourselves and our shareholders – which I know also includes many of you.”

The decision has not changed fortunes for the chief executive, antónio horta-osório, who is set to leave in june 2021 and confirmed earlier this year that he would waive his 2020 bonus, worth as much as £1.8m. William chalmers, the finance chief, also ruled himself out of a payout worth up to approximately £800,000.

The decision to cancel bonuses means lloyds will avoid uncomfortable questions from UK regulators, which said last week they would be scrutinising cash bonuses for bankers in light of the continued economic uncertainty.

But the cancellation could prove controversial, if the bank decides to pay shareholders dividends in the new year. The bank of england last week lifted its temporary ban on dividend payouts to investors, but told lenders a cap would be imposed until at least mid-2021.

The coronavirus pandemic has put pressure on bank earnings. Record low interest rates have squeezed net interest income, which measures the difference between interest earned on loans v that paid on deposits. The deteriorating economic outlook has also forced lloyds to put aside £4.1bn so far to cover potential defaults on loans and credit cards.

Lloyds has also announced almost 2,000 job losses since september as part its restructuring plans.

Accord, a specialist union for staff in financial services, said: “bad news is bad news and the lack of any group performance share [bonus] will give some individuals real problems next year when many family budgets are already stretched.”

However, unions have reached a tentative agreement to increase salaries by at least 1% for about 80% of lloyds banking group staff. The lowest-paid workers will be guaranteed a pay rise of at least £400.

Lloyds is also considering distributing shares to employees in the new year in lieu of a bonus, and earlier this year paid one-off bonuses worth £250 to frontline staff who had worked through the pandemic.

The group said: “this decision on bonuses in no way reflects the hard work and commitment our people have made throughout this extraordinary year to keep our businesses operating strongly and to provide support and help to our consumer and business customers.”

Online casino bonuses – types and qualities

Table of contents:

Introduction

Online casino bonuses and promotions are one of the most significant factors for many punters when choosing with which casino to sign-up and make a deposit. After all, the games are, for the most part, the same. You have your slots, table and dice games, but the added incentive is the bonuses and giveaways that can draw in both new and experienced punters.

This is why casino.Com UK strives to be the best and to offer the finest online casino bonuses available for UK players.

Casino bonus types

There are several different kinds of bonuses. These range from welcome package bonuses, which incentivize punters to sign-up at the casino, to reload bonuses that reward players for making additional deposits.

The most common bonuses are:

No deposit bonus

No deposit bonus is one of the most sought-after bonuses, for obvious reasons, but it is tough to find. This type of bonus can be used to either greet new players, by requiring them to register for an account or as part of a loyalty program that rewards active players.

In addition to a monetary no deposit bonus, at times you will also find a no deposit bonus in the form of spins for a particular game, or group of games.

When you can get a no deposit bonus, you will have complete access to all the real money games, but you will need to fulfil the wagering requirements before you can make any withdrawals. Most of the time there is either a time limit or a minimum number of bets that must be played to qualify for a withdrawal. Make sure to read the terms and conditions when you claim the no deposit bonus.

Deposit required bonus (reload bonus)

Receiving a bonus with a deposit, whether it’s the first deposit or the tenth, has become pretty standard in the online casino industry.

Casino.Com UK stands apart from the competition in this regard as it has one of the biggest and most rewarding welcome package bonus offers.

Generally speaking, the welcome package bonus is the most significant bonus offer, often matching your first deposit with bonus money. The way these match bonuses work is, let’s say for example, that you make a £100 deposit. You then receive an additional £100 as your reload bonus.

Now you have £200 with which to bet, but you won’t be able to withdraw the money until you fulfil the wagering requirement. This will be discussed in greater detail down below.

It is essential to check out the current bonus offers to make sure you get the best possible deal. For example, sometimes there is an extra bonus for punters depositing on a specific day of the week or when playing a particular game.

Pre-wager bonuses

There are two types of pre-wager bonuses:

1. No-deposit.


2. Reload.

In both of cases, the money is credited to the account instantly but it will have to fulfil the wagering requirements before it can be moved over to a real money balance.

Until the wagering requirements have been met, the bonus money and any money that is won while betting with it, will be credited to a bonus account. In general, only after the correct amount of betting has been done will the funds be transferred to the real money balance and be available for real money betting or withdrawal.

If the pre-wager bonus came in the form of a non-redeemable bonus, only the winnings will become available while the actual bonus itself will remain in the bonus account.

After-wager bonuses

An after-wager bonus (also known as post-wager bonus) avoids the punter having to worry about meeting wagering requirements because it will only be transferred into the account after the conditions have been met.

The biggest advantage here is that once the bonus is transferred into your account, it is no longer treated as bonus money and can be withdrawn, or used how you see fit.

Punters can have different types of bonuses in their account at the same time, but only one of them will be active at a time. The punter doesn’t have the option of how and when to use each bonus, instead they are activated in the order with which they were received. The post-wager bonus is the exception to this rule, and can’t be activated while there are pre-wager bonuses in play.

Casino bonus codes

Casino bonus codes can be found either on the casino.Com UK promotions page or they can be sent via SMS/email. (pro-tip – make sure to opt-in to receiving promotional messages, so as not to miss out on special codes).

These codes can unlock special bonuses that range from spins, additional bonus money, no deposit bonuses, and more. These codes are only available for a limited time, and usually built around a promotion or upcoming holiday so if you see one, make sure to claim it right away.

VIP program

At casino.Com UK we reward our VIP UK players with exclusive bonuses and prizes. These VIP bonuses can be awarded daily, weekly, or monthly. Some of the benefits of being a VIP include a personal account manager, unique gifts, invitations to VIP events and a higher loyalty point conversion rate.

For full complete details you can go to the VIP program page.

Cash and cashback

Cash and cashback bonuses are a decent insurance plan for some punters. For those who qualify, the player will get a refund back for a percentage of their net losses. Check the terms and conditions for updated information as to when the cashback bonus takes place, and how much a player would have to lose to qualify.

When it comes as a cash bonus, this is a straight cash bonus, with no wager requirements.

Golden chips

Golden chips are treated almost like real chips (for table and card games), meaning they can be mixed and matched to increase the bet size; however, only one golden chip may be used per bet. Punters may use a combination of a golden chip and a regular chip, but any money won during that bet will be considered as a bonus win. Meaning, it won’t be redeemable until the betting requirements have been met.

Slot machines

Online slot games are among the most popular casino games at casino.Com UK. One of the reasons for this is all the in-game bonus features that they come with.

Usually, it takes a combination of specific symbols to land on the reels on a single spin, and you can win additional spins or other cash bonuses.

Every game has a unique set of rules when it comes to the number of bonus rounds, or how that number is determined. Be sure to check out the game's paytable before playing for a complete set of rules.

For more information on the online slot game options, features, or to play for real money, visit our dedicated slots page.

Bonus spins

There are a variety of ways to get bonus spins. As mentioned above, you can win them during regular gameplay in many online slot games. Another way to get awarded with spins is as a part of the welcome package bonuses or reload bonuses. These spins are typically restricted to specific games and have wagering requirements that need to be met to be redeemed.

For a complete breakdown of this great type of bonus, check out the bonus spins page.

Qualities

Not all bonuses are created equal. To make sure that you claim the best bonus, pay attention to the following four main factors to help determine its quality:

1. Bonus amount.


2. Game context.


3. Redeemable or non-redeemable.


4. Wagering requirements.

Amount

Understand the total value of the bonus and what it includes. It is important to read the terms and conditions, and understand the type of bonus and whether or not a deposit is required.

Game context

Some bonuses are restricted to a specific game or games, makes sure to read the terms and conditions so as not to claim a bonus for a game that you won’t play.

Redeemable or non-redeemable

1. Redeemable bonus: welcome package bonuses are usually an excellent example of a redeemable bonus. The money is added into the player’s bonus account and can be used when wagering on casino games. However, this money can only be redeemed once the wagering requirements are fulfilled. Then the money is added to the player's overall account balance.


2. Non-redeemable bonus: when you play casino games with a non-redeemable bonus, you will only be able to withdraw money that you won playing the casino games. However, the bonus money must remain in your account.

Wagering requirements

Wagering requirements, also known as playthrough and rollover, require a punter to use the bonus money a certain amount of times before the money is available for withdrawal. As an example, if you receive a £30 welcome package bonus with a 15x multiplier, it means that you have to make £450 worth of bets.

There are three main types of wagering requirements at casino.Com UK:

1. Multipliers of the deposit.


2. Multipliers of the bonus.


3. Multipliers of the sum of the deposit and bonus.

Every bonus at casino.Com UK comes with a different set of wagering requirements, so it is of the utmost importance that you carefully read the terms and conditions for each bonus.

Wager percent contribution

The games that you play and the bets that you lay will also have a different impact on the wagering requirements. Using the example above, if you have a £450 playthrough a £1 bet on a slot game will often be valued at £1. But, a bet at the roulette table is worth much less. Additionally, if you make a high percentage roulette bet or a bet that covers most of the table, that money won’t be counted towards your wager requirements. Game wager percent contribution can be found here.

So, let's see, what we have: A bonus is a financial reward beyond what was expected by the recipient. Learn how companies reward employees with incentive and performance bonuses. At bonuses