Bonus Tax Calculator UK: How Much Will You Actually Keep? (2026/27)
Income tax and NI on your bonus. 2026/27 rates. Updated 17 April 2026.
How bonuses are taxed through PAYE
In the UK, a bonus is treated as employment income and taxed through the Pay As You Earn (PAYE) system. Your employer adds the bonus to your annual earnings, calculates the total income tax and NI due on the combined figure, and deducts accordingly. The bonus is not taxed separately from your salary; it is added to it.
The key concept is the marginal rate. If you earn £45,000 in salary and receive a £10,000 bonus, the bonus is taxed at the rate that applies to your highest band of income. The first £5,270 of the bonus (taking you from £45,000 to £50,270) is taxed at the basic rate of 20%. The remaining £4,730 (pushing you above the higher-rate threshold of £50,270) is taxed at 40%.
National Insurance is charged similarly. Employee NI is 8% on earnings up to £50,270 and 2% above. A bonus that pushes your total income above the Upper Earnings Limit saves you NI on the amount above it, because you move from the 8% zone to the 2% zone for that portion.
Worked example: £45,000 salary with £10,000 bonus
| Component | Without bonus | With £10,000 bonus | Difference |
|---|---|---|---|
| Gross income | £45,000 | £55,000 | +£10,000 |
| Income tax | £6,486 | £9,432 | +£2,946 |
| National Insurance | £2,594 | £3,111 | +£517 |
| Take-home | £35,920 | £42,457 | +£6,537 |
On a £10,000 bonus on top of a £45,000 salary, you keep £6,537 (65%). The bonus crosses the 40% higher-rate threshold at £50,270. The NI Upper Earnings Limit is also at £50,270, meaning NI on the bonus above that threshold drops to 2%. Income tax: £2,946 extra. NI: £517 extra.
If your bonus triggers the 60% tax trap
If your bonus takes your total income above £100,000, the personal allowance begins to taper. For every £2 of income above £100,000, you lose £1 of personal allowance. This creates an effective marginal rate of 60% on income between £100,000 and £125,140. On a bonus of £20,000 that takes you from £100,000 to £120,000, you may keep as little as £8,000.
The most common solution is to sacrifice some or all of the bonus into a pension contribution. This reduces your adjusted net income and can bring you back below £100,000, restoring the personal allowance. See the pension sacrifice calculator for worked examples.
Salary sacrifice your bonus into pension
Many employers allow employees to direct a bonus into a salary sacrifice pension contribution. Because salary sacrifice reduces gross income before tax and NI are calculated, the tax saving is at the marginal rate. At 40%, every £1,000 sacrificed saves £400 in income tax and £20 in NI (2% above the UEL). For basic-rate taxpayers, every £1,000 sacrificed saves £200 in tax and £80 in NI.
Check with your employer whether bonus sacrifice is available under your pension scheme rules. Not all schemes permit it, and there are Annual Allowance limits (£60,000 in 2026/27) that cap how much you can contribute to pension in a tax year while receiving tax relief.
Frequently asked questions
How is a bonus taxed in the UK?+-
A bonus is treated as employment income and taxed through PAYE in the same way as your regular salary. HMRC adds your bonus to your annual earnings and calculates income tax and NI on the combined total. The tax on a bonus is charged at your marginal rate: if you are a basic-rate taxpayer, you pay 20% income tax and 8% NI on the bonus, keeping about 72%. If you are a higher-rate taxpayer, you pay 40% income tax and 2% NI (if above the Upper Earnings Limit), keeping about 58%.
Does a bonus affect my NI differently to salary?+-
In some cases, yes. Employee NI is calculated on a weekly or monthly basis, not an annual basis. If your bonus is paid in a single month, it may push that month's earnings above the Upper Earnings Limit (equivalent to £4,189/month or £967/week). Only the portion below the UEL in that month is taxed at 8%; the rest is taxed at 2%. However, for most bonuses that are not extremely large, this effect is small. For simplicity, our calculator annualises the calculation.
Can I sacrifice my bonus into my pension to save tax?+-
Yes, and this can be very tax-efficient, especially if your bonus pushes you into the 60% tax trap between £100,000 and £125,140. Many employers allow you to direct some or all of a bonus into a salary sacrifice pension contribution. At the 40% rate, sacrificing £10,000 of bonus into pension costs you only £5,800 in lost take-home but adds £10,000 to your pension. At the 60% effective rate, sacrificing into pension to bring your income back below £100,000 is one of the most efficient tax-planning moves available.