Bonus Tax Calculator
A bonus is taxed in the same way as your regular salary — but because it pushes your earnings higher in a single pay period, it can appear to attract a shockingly high rate of deduction. Our bonus tax calculator shows exactly how much income tax and National Insurance you will pay on any bonus amount, and how much you will actually take home after deductions in 2026/27.
Bonus Tax Calculator
Find out how much of your bonus you'll actually take home after tax and NI for 2026/27.
How Is a Bonus Taxed in the UK?
Your employer adds your bonus to your regular pay for the month it is paid and deducts income tax and National Insurance using PAYE — the same system applied to your salary. Because the combined total for that month is higher, the tax withheld is proportionally larger. However, bonuses are taxed at your marginal rate, not a special bonus rate.
If your regular salary keeps you in the basic rate band and your bonus pushes you into the higher rate band for that month, your employer may deduct 40% on the portion above the threshold. Over the full year, HMRC will reconcile the position — if too much tax was withheld, it is refunded via PAYE or through self-assessment. The key point is that total tax paid over the year depends on total annual earnings, not on how a bonus affects a single pay period.
Bonus Tax Calculation Example
Suppose your annual salary is £35,000 and you receive a £5,000 bonus. Your total earnings for the year become £40,000. Income tax on £40,000 is £5,486 (20% on taxable income of £27,430). Income tax on £35,000 alone is £4,486. The bonus therefore attracts £1,000 in income tax (20%) and £400 in National Insurance (8%) — leaving a net bonus of £3,600 in your pocket. At higher earnings levels, where the 40% rate applies, the net value of the same £5,000 bonus drops to roughly £3,000.
Can You Reduce Tax on a Bonus?
Yes — directing some or all of your bonus into your pension via salary sacrifice is the most effective way to reduce the tax and NI on a bonus. A £5,000 bonus contributed to a pension saves £1,400 in combined income tax and NI for a basic rate taxpayer, and up to £2,100 for a higher rate taxpayer. The pension contribution is made from gross pay before any deductions, so the full £5,000 enters your pension — your employer and HMRC effectively contribute alongside you. Our Salary Sacrifice Calculator models the exact tax saving for your situation.
Frequently Asked Questions
If your salary plus bonus exceeds £50,270 in the 2026/27 tax year, the portion above this threshold is taxed at 40% rather than 20%. Your employer may withhold higher rate tax in the month the bonus is paid, but your annual tax position is calculated at year-end and any over-deduction is refunded.
If your total income including the bonus exceeds £100,000, your Personal Allowance is reduced — by £1 for every £2 earned above £100,000. A bonus that takes you from £95,000 to £110,000, for example, reduces your allowance by £5,000, creating an effective marginal rate of 60% on that slice of income.
Non-cash benefits such as vouchers, holidays, or goods have a monetary value that is reported on a P11D and taxed through your tax code the following year. Only certain qualifying benefits — such as pension contributions or childcare vouchers issued before 4 October 2018 — are exempt from income tax and NI.
A signing-on bonus is treated identically to any other bonus — taxed through PAYE at your marginal rate in the month of payment. If your new employer pays it before you have submitted a P45, they may apply an emergency tax code which could result in an over-deduction. This is corrected at year-end.
Some employers offer to gross up a bonus to ensure you receive a specific net amount. This costs the employer more in employer NI but can simplify budgeting. Always clarify whether a stated bonus is gross or net before accepting. Use our Take-Home Pay Calculator to convert any gross bonus to its net equivalent.
Enter your regular annual salary first — this determines which band your bonus falls into. Then add the bonus amount. The calculator adds both together to find the marginal rate applicable to the bonus portion. If your salary is in the basic rate band but your bonus pushes annual income above £50,270, the excess is taxed at 40%. The results show your net bonus after income tax and NI so you know exactly what lands in your account. Employer NI on the bonus is shown for reference — useful for employers and for employees considering salary sacrifice on bonus payments, where employer NI saved is sometimes shared. Bonus timing matters: a new tax year resets all thresholds and allowances.
Important Information
This calculator is provided for general information and planning purposes only. It does not constitute financial or tax advice and should not be relied upon as such. Figures are indicative estimates based on simplified, publicly available criteria and stated assumptions. Actual results depend on your full circumstances. See our Disclaimer for further information.