How to use the bonus tax calculator
- 1 Enter your yearly salary before the bonus.
- 2 Enter the bonus before tax.
- 3 Choose your student loan plan, if you have one.
- 4 Read the bonus you keep and the deductions taken from it.
Worked example
An employee earning £45,000 receives a £5,000 bonus. The whole bonus stays within the basic rate band, so income tax is £1,000 and National Insurance is £400. They keep £3,600, or 72% of the bonus. Sacrificing it into a pension would put the full £5,000 in their pot.
Keeping more of your bonus
- Bonus sacrifice: many employers let you pay a bonus straight into your pension, saving income tax and NI, and often adding their NI saving too. You must agree it before the bonus is paid.
- Watch the cliffs: a bonus can push income over £60,000, triggering the Child Benefit charge, or over £100,000, where the personal allowance starts to go.
- Month of payment: PAYE spreads your allowance through the year, so the bonus month can look over-taxed; it usually evens out by April.
Check the effect on Child Benefit with the Child Benefit Calculator and above £100,000 with the 60% Tax Trap Calculator.
Features
Marginal calculation
Tax is worked out on the bonus as the top slice of your income.
Income tax, NI and student loan
All three deductions shown separately.
Effective rate
See what percentage of the bonus goes to deductions.
Pension option
Compare with sacrificing the bonus into your pension.
When to use it
Annual bonuses
Know what to expect before payday. Over £100,000? See the 60% Tax Trap Calculator.
Commission
Estimate tax on a large sales commission. Sacrifice it with the Pension Salary Sacrifice Calculator.
Higher rate threshold
See how much of a bonus is taxed at 40%. Check the effect with the Child Benefit Calculator.
Bonus sacrifice
Decide whether to put a bonus into your pension. See normal pay with the Take-Home Pay Calculator.
Related Pay and Salary tasks
Frequently asked questions
How is a bonus taxed in the UK?
A bonus is treated as normal earnings. It is added to your pay in the month it is paid and taxed through PAYE with income tax, National Insurance and any student loan repayments.
Why does my bonus month look over-taxed?
PAYE works on a cumulative basis, but a large one-off payment can push that month's pay into a higher band. Over the full tax year it usually evens out, and any overpayment is corrected.
What rate of tax will I pay on my bonus?
It depends on your total income. Basic rate taxpayers lose 28% to tax and NI, higher rate taxpayers 42%, and between £100,000 and £125,140 the rate can be over 60%.
Is National Insurance charged on bonuses?
Yes. Employee NI is 8% between £12,570 and £50,270 and 2% above that, and it applies to bonuses in the same way as salary.
Can I avoid tax on a bonus?
You can reduce it by sacrificing the bonus into your pension, if your employer allows it. The money goes into your pension before tax and NI, and your employer may add their NI saving too.
Does a bonus affect my student loan?
Yes. Repayments are 9% of income above your plan threshold, so a bonus usually increases your repayment for that pay period.
Will a bonus affect Child Benefit?
If it takes your adjusted net income above £60,000 you start paying the High Income Child Benefit Charge, which removes 1% of the benefit for every £200 over that level.
Can a bonus make me lose my personal allowance?
Yes. If your adjusted net income goes above £100,000, your personal allowance falls by £1 for every £2 over the limit. Pension contributions can help keep you under it.
Are bonuses pensionable?
Some schemes include bonuses in pensionable pay and some do not. Check your scheme rules to see whether your employer contributes on bonuses.
When is bonus tax paid?
It is deducted by your employer when the bonus is paid, so you receive the net amount and HMRC gets the rest straight away.
Is a Christmas bonus taxable?
Cash bonuses are always taxable. Small non-cash gifts of up to £50 that count as trivial benefits can be tax-free.
Does this calculator include Scottish tax?
No. It uses the bands for England, Wales and Northern Ireland. Scottish taxpayers have different income tax bands but the same National Insurance.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Built and reviewed by Hamza Farooq, founder and lead developer
· Last updated
· How we check our tools
· Report a problem