Bonus Tax Calculator

Quick answer

A bonus is taxed as normal income in the month it is paid: no special "bonus tax" exists in the UK. A basic-rate taxpayer keeps about 72% of a bonus (20% tax + 8% NI), a higher-rate taxpayer about 58% (40% + 2%), and in the £100,000 to £125,140 zone only around 38% survives.

A bonus is welcome, but the amount that lands in your account is often a lot less than the headline figure. The bonus tax calculator above shows exactly how much income tax and National Insurance comes off, and how much you keep. This guide explains why a bonus is taxed the way it is, why your payslip can look alarming in the bonus month, and the legal ways to keep more of it.

How is a bonus taxed?

A bonus is treated as ordinary earnings, so it is taxed exactly like salary - there is no special "bonus tax rate". It is added on top of your normal pay, which means it is taxed at your marginal rate: the rate that applies to your highest slice of income. For a basic-rate taxpayer that is 20% income tax plus 8% National Insurance; for a higher-rate taxpayer it is 40% income tax plus 2% National Insurance on the part above the upper earnings limit. Because the bonus sits on top of your salary, it can push part of your income into a higher band even if your normal pay sits comfortably in the basic-rate band.

Why your bonus payslip can look shocking

Many people are alarmed to see a huge deduction the month their bonus is paid, sometimes far more than they expected. There are two reasons. First, income tax through PAYE is cumulative, but a large one-off payment in a single month can temporarily push you into a higher tax band for that month's calculation, so more tax is taken than the bonus alone justifies over the year. Second, National Insurance is worked out per pay period, not annually - so a big bonus in one month attracts NI as if you earned that much every month. The good news is that the income tax usually evens out over the rest of the year through PAYE, and any genuine overpayment is corrected automatically. The National Insurance, however, is not refunded, because it is correctly charged on that period's pay.

Worked example - a basic-rate taxpayer

Suppose you earn £30,000 and receive a £2,000 bonus. Your salary keeps you within the basic-rate band, so the bonus is taxed at 20% income tax (£400) and 8% National Insurance (£160), leaving you with £1,440 of the £2,000. That is a 28% combined deduction - the standard marginal cost for a basic-rate employee.

Worked example - a bonus that crosses into higher rate

Now suppose you earn £48,000 and receive a £5,000 bonus, taking your total to £53,000. The first £2,270 of the bonus fills the rest of your basic-rate band (up to £50,270) and is taxed at 20% plus 8% NI. The remaining £2,730 falls into the higher-rate band, taxed at 40% plus 2% NI. So part of the same bonus is taxed far more heavily than the rest. This is why a bonus that tips you over £50,270 delivers less than you might hope - and why diverting some of it into a pension can be so effective.

How to keep more of your bonus

• Bonus sacrifice into a pension. Many employers let you pay some or all of a bonus straight into your pension before tax. This avoids both income tax and National Insurance on the sacrificed amount, and some employers even add their saved NI to your pension too.
• Stay under a threshold. If a bonus would push you over £50,270 or £100,000, sacrificing the excess into a pension keeps you below the higher-rate band or the 60% allowance-taper trap.
• Check your tax code after the bonus month to make sure any temporary overpayment of income tax is corrected.
• Time it where possible. If you have any say over when a bonus is paid, spreading it across two tax years can keep more of it in lower bands.

What about a bonus near £100,000 or £50,270?

Two income points make a bonus especially expensive. Crossing £50,270 moves the excess from 20% to 40% income tax. Crossing £100,000 is worse: between £100,000 and £125,140 you also lose personal allowance at £1 for every £2, creating an effective 60% rate on that slice. If your bonus takes you into either zone, pension sacrifice is usually the single most effective way to protect it - you keep the money (in your pension) instead of handing 40% or 60% to HMRC. Model the effect with our salary sacrifice calculator.

Bonuses, Child Benefit and the £100,000 trap in detail

A large bonus can have knock-on effects beyond the immediate tax. If it pushes your adjusted net income over £60,000 and you claim Child Benefit, it can trigger the High Income Child Benefit Charge, which claws back the benefit up to £80,000. If it takes you over £100,000, you start to lose your personal allowance, creating an effective 60% marginal rate up to £125,140. In both cases, paying part of the bonus into a pension reduces your adjusted net income and can keep you below the threshold - protecting the Child Benefit, the personal allowance, or both. For higher earners, a bonus is one of the most valuable moments to use pension sacrifice, because the money you would otherwise lose to a 60% effective rate goes into your own pension instead.

Non-cash bonuses and benefits in kind

Not every bonus is paid in cash. Some employers reward staff with vouchers, shares, a company car, private medical cover or other perks. Most of these are benefits in kind and are still taxable - their value is added to your income and taxed, usually collected through an adjustment to your tax code rather than a one-off deduction. Some share schemes are more tax-efficient than cash, and certain small perks are exempt, so it is worth understanding how a non-cash reward will be taxed before assuming it is "free". If you are offered a choice between cash and a benefit, compare the after-tax value of each rather than the headline figure.

Worked example - a high earner near £100,000

Suppose you earn £95,000 and receive a £15,000 bonus, taking you to £110,000. The slice between £100,000 and £110,000 is taxed at 40% income tax plus the loss of personal allowance, an effective 60% rate - so on that £10,000 you could lose around £6,000 to tax and lost allowance. If instead you sacrifice £10,000 of the bonus into your pension, your income stays at £100,000, your full personal allowance is preserved, and the £10,000 sits in your pension rather than being taxed at 60%. This is why bonus season is prime time for pension planning if you are near £100,000.

What to do when you get a bonus

A little planning turns a bonus from a tax shock into an opportunity. Before it is paid, check whether your employer offers bonus sacrifice into a pension - this is usually the most tax-efficient option and has to be arranged before the bonus is paid, not after. Work out roughly where the bonus leaves your total income for the year, so you know whether any of it crosses £50,270, £60,000 or £100,000, where it is taxed much more heavily. Decide in advance how much you want as cash and how much, if any, to divert into your pension. After the bonus lands, check your payslip and tax code to make sure the deductions look right, and remember that any temporary over-deduction of income tax should correct itself over the following months through PAYE.

It also helps to be clear about your goal. If you need the money now, taking the bonus as cash and accepting the tax is perfectly reasonable. If you are focused on long-term wealth and you are a higher earner, sacrificing some or all of it into a pension can dramatically increase what you keep, because you avoid both income tax and National Insurance on the sacrificed amount. There is no single right answer - the best choice depends on your priorities, your income level and whether the bonus pushes you across a threshold. Running the numbers through the calculator above, and a salary sacrifice calculator, lets you make that decision with the real figures in front of you rather than guessing.

Check your wider position

A bonus changes your total income for the year, so it is worth seeing the full picture. Use our income tax calculator to see how the bands apply to your salary plus bonus, the salary calculator for your overall take-home pay, and the National Insurance calculator to understand the NI side. If your employer offers pension sacrifice, the salary sacrifice calculator shows how much of a bonus you could shelter.

Key takeaways

• A bonus is taxed like salary, at your marginal rate - there is no special bonus tax rate.
• A basic-rate employee keeps about 72% of a bonus; a higher-rate employee about 58%.
• Your bonus-month payslip can look worse than the real cost because NI is charged per pay period.
• Paying a bonus into a pension (bonus sacrifice) avoids both income tax and National Insurance.
• Watch the £50,270 and £100,000 thresholds, where a bonus is taxed much more heavily.

This calculator and guide give general information for the 2026/27 tax year, not personal tax advice. Check your own circumstances or speak to HMRC or an adviser if you are unsure.

What survives of a £2,000 bonus

Near £50,270, £60,000 (Child Benefit) or £100,000 (childcare)? Sacrificing the bonus into your pension can beat taking the cash: see the pay rise tax trap calculator and salary sacrifice. Official rates: GOV.UK.

Who should use this calculator

Shows what is left of a bonus after tax, National Insurance and any student loan. The number is usually lower than people expect, for two reasons: a bonus sits on top of your salary so it is taxed at your marginal rate throughout, and PAYE often taxes it as though you earned that much every month.

The pension sacrifice option is the useful part. Bonus sacrifice is one of the most tax-efficient moves available — the whole amount goes into your pension with no Income Tax and no National Insurance, and for anyone whose bonus straddles £100,000 or the Child Benefit threshold it can be worth far more than the headline relief.

What this calculator assumes

• The bonus is added to your annual salary and taxed at the resulting marginal rate.
• Income Tax, National Insurance and student loan deductions all apply.
• Sacrificing into a pension diverts the amount before tax and NI, so the full sum arrives in the pension.
• Selecting Scotland applies Scottish Income Tax bands.

Limitations — what it does not cover

• Month-1 over-deduction. PAYE frequently taxes a bonus as if it repeated monthly, so the payslip deduction can be far larger than the true annual liability — it corrects itself over later months.
• Per-period National Insurance, which does not correct later and genuinely costs more on a lump sum.
• Deadlines for sacrifice. The election must normally be made before the bonus is contractually due — afterwards it is too late.
• Your remaining annual allowance, which a large bonus sacrifice can exhaust in one go.
• Clawback clauses requiring repayment if you leave, which can be gross rather than net.