Bonus Tax Calculator UK 2026/27: What You Actually Keep

A bonus tax calculator UK search usually happens for one of two reasons: the bonus has just been announced and you want to know what will actually land in your account, or it has already been paid and the number on your payslip was a shock. Both are completely normal reactions. Bonuses in the UK are not taxed at a special “bonus rate”, but the way PAYE handles a large one-off payment can make it feel like HMRC has taken half of it. Sometimes it genuinely has. This guide walks you through exactly how a bonus is taxed in 2026/27, shows you three fully worked examples at different salary levels, and explains the one situation where you might be owed money back.

A bonus tax calculator UK figure is worked out by adding the bonus to your annual salary and taxing it at your marginal rate. In 2026/27 that means 20% income tax plus 8% National Insurance for most basic rate earners, or 40% plus 2% once your total pay passes £50,270. Student loan repayments come off on top.

How a Bonus Is Taxed in the UK

Your employer treats a cash bonus as ordinary employment income. It goes through payroll alongside your salary, and PAYE applies income tax and Class 1 National Insurance to it in exactly the same way it does to your monthly pay.

That is the good news and the bad news at the same time. Good, because there is no punitive bonus levy waiting for you. Bad, because a bonus is stacked on top of your existing earnings, so it is taxed at your highest rate rather than an average of your rates.

Think of your annual income as a stack of blocks. Salary fills the stack from the bottom up. The bonus sits on the very top, so it is charged at whatever rate applies at that height. If your salary already fills the basic rate band, the bonus starts at 40%.

Cash bonuses versus non-cash bonuses

Most bonuses are cash and go through payroll. Non-cash bonuses are handled differently. Vouchers and gift cards are usually treated as earnings and taxed. Share awards are taxed when they vest, and the rules depend heavily on the scheme. Company cars, gym memberships and similar perks are benefits in kind, reported on a P11D or payrolled, and taxed on their cash equivalent value rather than at a flat rate.

If you are not sure which category your payment falls into, the answer will be on your payslip. Our guide on how to read a UK payslip shows you where bonus payments and benefit deductions appear.

The 2026/27 Rates Your Bonus Is Measured Against

Every bonus tax calculator UK tool is running the same underlying numbers. HMRC confirmed that the Personal Allowance and higher rate threshold remain frozen for 2026/27, with the basic rate limit at £37,700 and the higher rate threshold at £50,270 until at least April 2028.

These are the England, Wales and Northern Ireland figures for the 2026/27 tax year.

Scotland runs its own income tax bands, so Scottish taxpayers should expect different income tax figures. National Insurance is set UK-wide and does not vary by nation.

Student loan repayments come off too

A bonus counts as earnings for student loan purposes, which is why people with loans see a noticeably smaller net figure. The 2026/27 annual thresholds are £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4 and £25,000 for Plan 5. Repayments are 9% of earnings above the threshold. A Postgraduate Loan adds a further 6% above £21,000, and it stacks on top of any undergraduate plan.

If your salary is already above your threshold, expect the full 9% (or 15% with a postgraduate loan on top) to be taken from the whole bonus.

Pension contributions

If you are in a standard auto-enrolment scheme, your contribution is usually a percentage of qualifying earnings and will often apply to the bonus as well. That reduces your take-home in the month, but the money is yours, so it is a transfer rather than a tax.

How to Calculate Your Bonus After Tax in Five Steps

1. Add the bonus to your gross annual salary. This gives the total income figure the bonus will be taxed against.
2. Find where the bonus sits. Work out how much of it falls below £50,270 and how much falls above. Split it into two chunks if it straddles the threshold.
3. Apply income tax to each chunk. 20% below £50,270, 40% between £50,270 and £100,000, roughly 60% effective between £100,000 and £125,140, and 45% above that.
4. Apply National Insurance. 8% on the portion below £50,270 and 2% on everything above.
5. Deduct student loan and pension. 9% of the bonus for most loan plans if your salary already exceeds the threshold, plus your pension percentage.

What remains is your net bonus. It is worth doing this by hand once, even roughly, because it turns an unpleasant surprise into an expected number.

Three Worked Examples

Example 1: £30,000 salary, £2,000 bonus

Total income becomes £32,000, comfortably inside the basic rate band, so the whole bonus is taxed at 20% plus 8% NI.

• Income tax: £2,000 × 20% = £400
• National Insurance: £2,000 × 8% = £160
• Take-home: £1,440, which is 72% of the bonus

Add a Plan 2 student loan and a further £180 comes off (9% of £2,000, because the £30,000 salary already clears the £29,385 threshold). Take-home falls to £1,260, or 63%.

Example 2: £48,000 salary, £6,000 bonus

This is the case that catches most people out, because the bonus straddles the higher rate threshold. The first £2,270 of the bonus takes you from £48,000 to £50,270 and is taxed at basic rate. The remaining £3,730 is taxed at higher rate.

• Income tax: (£2,270 × 20%) + (£3,730 × 40%) = £454 + £1,492 = £1,946
• National Insurance: (£2,270 × 8%) + (£3,730 × 2%) = £181.60 + £74.60 = £256.20
• Take-home: £3,797.80, which is about 63% of the bonus

Notice the quirk here. Because National Insurance falls from 8% to 2% at the same point income tax rises from 20% to 40%, the combined marginal rate only moves from 28% to 42%. It is a jump, but not the doubling people fear.

Example 3: £95,000 salary, £15,000 bonus

This one is genuinely brutal, and it is the reason high earners are often advised to sacrifice their bonus entirely.

The first £5,000 of the bonus takes you from £95,000 to £100,000 and is taxed at 40% plus 2% NI. The remaining £10,000 pushes you into the Personal Allowance taper zone, where every £2 of income costs you £1 of Personal Allowance.

• Income tax on the first £5,000: £2,000
• Income tax on the next £10,000: £4,000 direct, plus £2,000 because £5,000 of Personal Allowance is withdrawn and becomes taxable at 40%. That is £6,000, an effective 60%.
• National Insurance: £15,000 × 2% = £300
• Take-home: £6,700 from a £15,000 bonus, which is under 45%

Put another way, the last £10,000 of that bonus delivers £3,800 in the bank. That is the arithmetic that makes bonus sacrifice so attractive at this income level.

Quick Reference: What You Keep From a Bonus

These figures assume the whole bonus sits cleanly inside one band and ignore pension contributions.

If your salary sits close to £50,270, remember that part of your bonus will be taxed at 28% and part at 42%, so your real figure will land between the two rows. For a fuller picture of your regular monthly pay at these levels, our £50,000 after tax guide breaks down the salary side in detail.

The 60% Band Between £100,000 and £125,140

This is the least understood part of the UK tax system and it bites hardest on bonuses, because a bonus is exactly the kind of payment that tips someone over £100,000 for the first time.

Once your adjusted net income passes £100,000, your £12,570 Personal Allowance reduces by £1 for every £2 of income above that line. By £125,140 it has vanished completely. The withdrawn allowance becomes taxable at 40%, which layers an extra 20 percentage points on top of the headline 40% rate.

Add 2% National Insurance and the effective marginal rate is around 62%. It applies to a £25,140 slice of income and then stops, so income above £125,140 is actually taxed more lightly at 47% combined.

Two other things disappear in this zone if you have children. Tax-Free Childcare and the 30 hours of funded childcare in England are both withdrawn once either parent has adjusted net income above £100,000. For a family using both, the true cost of crossing that line can far exceed the tax itself.

Bonus Sacrifice Into a Pension

Bonus sacrifice means agreeing with your employer, before the bonus is paid, that some or all of it goes straight into your workplace pension instead of your bank account. Because the money never becomes your pay, it is not subject to income tax or employee National Insurance.

The saving is your full marginal rate. A basic rate taxpayer saves 28%, a higher rate taxpayer saves 42%, and someone in the taper zone saves around 62%. Many employers also pass back some or all of the 15% employer National Insurance they save, which adds further to the pension pot.

A worked comparison

Take the £95,000 earner with a £15,000 bonus from Example 3.

• Take it as cash: £6,700 in the bank.
• Sacrifice it entirely: £15,000 into the pension, Personal Allowance fully preserved, and potentially more if the employer shares its NI saving.

You are effectively turning £6,700 of spendable cash into £15,000 or more of retirement savings. Whether that is right for you depends entirely on whether you need the money now, and this is a decision worth discussing with a regulated financial adviser rather than acting on a website.

Things to watch before you sacrifice

• The annual allowance. Most people can put in up to £60,000 a year including employer contributions, though unused allowance from the previous three years can sometimes be carried forward. Very high earners face a tapered allowance.
• National Minimum Wage. Sacrifice cannot take your cash pay below the statutory minimum, which is £12.71 an hour for those aged 21 and over from April 2026.
• Knock-on effects. A lower recorded salary can reduce mortgage borrowing capacity, statutory maternity pay and death-in-service cover, which is often a multiple of salary.
• The 2029 change. The government has announced that from April 2029 only the first £2,000 of pension salary sacrifice each year will be free of National Insurance. The 2026/27, 2027/28 and 2028/29 tax years are unaffected.

Our salary sacrifice calculator guide covers the mechanics in much more depth, including how it interacts with electric car schemes and cycle to work.

When You Have Been Overtaxed and How to Get It Back

Most UK payroll runs on a cumulative PAYE basis. That means each month the software looks at your total pay and total tax for the year so far and works out the correct running total. In that system a bonus is usually taxed correctly, or very close to it, and any small over-deduction unwinds automatically over the following months.

Problems arise in three situations.

1. You are on a week 1 or month 1 tax code. This treats every pay period in isolation, so a large bonus is annualised as though you earn that much every month. The over-deduction can be severe and will not self-correct until HMRC issues a cumulative code or reconciles the year.
2. The bonus is paid in month 12. There are no remaining pay periods for the correction to work through, so any excess sits until the year-end reconciliation.
3. You have an emergency or incorrect tax code. A wrong code can cost you hundreds. Our guide to UK tax codes explained shows you how to check whether yours is right.

After the tax year ends on 5 April, HMRC reconciles your income tax automatically. If you overpaid, you will normally receive a P800 calculation and a refund. You do not need to chase it, though you can prompt HMRC through your Personal Tax Account if the figures look wrong.

National Insurance is different and this catches people out. NI is calculated per pay period and is not reconciled across the year for employees. If a one-off bonus pushed a chunk of your earnings above the Upper Earnings Limit in a single month, the 2% you paid on it is generally final. Refunds are only available in narrow circumstances, such as genuine payroll error or having paid NI on multiple jobs above the annual maximum.

Common Mistakes to Avoid

Assuming there is a special bonus tax rate

People often say “my bonus was taxed at 40%” as though a separate rule applied. It did not. The bonus simply landed in your 40% band. Understanding this matters, because it means the timing and structure of the bonus can change the outcome, whereas a fixed bonus rate could not be influenced at all.

Forgetting the student loan deduction when budgeting

A 9% slice of the whole bonus disappears the moment your salary is above the repayment threshold, and 15% if you also hold a Postgraduate Loan. On a £5,000 bonus that is £450 or £750 you may not have planned for. It is not a tax and it does reduce your loan balance, but it still comes out of the same payslip.

Missing the sacrifice deadline

Bonus sacrifice only works if the agreement is in place before you become entitled to the bonus. Once the payment has been made, or in many cases once the amount has been formally confirmed to you, HMRC treats the money as yours and sacrificing it retrospectively is not permitted. Employers typically run a short election window, so watch for that email.

Panicking at the month-of-payment payslip

The month a bonus is paid nearly always looks worse than the annual reality, particularly if your payroll uses a non-cumulative code or you also had overtime that month. Before assuming an error, check your year-to-date figures on the payslip rather than the single month.

Crossing £100,000 without checking childcare

If you have young children in England, a bonus that lifts adjusted net income above £100,000 can cost you Tax-Free Childcare and funded hours worth thousands of pounds. That loss is a cliff edge, not a taper, so a small bonus can leave a family measurably worse off. Modelling this before accepting or sacrificing is well worth the hour.

Frequently Asked Questions

Is a bonus taxed at 40% in the UK?

Only if your total income for the year places the bonus in the higher rate band, which starts at £50,270 in 2026/27. If you earn £35,000 and receive a £3,000 bonus, none of it is taxed at 40%, because your total is still comfortably inside the basic rate band. If you earn £55,000, the whole bonus is taxed at 40% plus 2% National Insurance, giving a combined 42% marginal rate.

Why did my bonus get taxed so much more than I expected?

Usually one of three reasons. Your bonus crossed a threshold and part of it was taxed at a higher rate. You are on a week 1 or month 1 tax code, so payroll annualised the bonus and over-deducted. Or you forgot to include National Insurance, student loan and pension in your mental maths, which together can easily add 15 to 20 percentage points on top of the income tax figure.

Can I get bonus tax back?

Income tax, often yes. If PAYE over-deducted, cumulative payroll usually corrects it within the same tax year, and anything left over is picked up in HMRC’s year-end reconciliation, which typically arrives as a P800 with a refund. National Insurance is normally final once deducted, because it is calculated per pay period rather than annually for employees.

Is it better to take a bonus as cash or put it in my pension?

It depends on your marginal rate and whether you need the money now. At basic rate the tax saving is 28%, which is useful but may not justify locking money away until at least age 55, rising to 57 from 2028. Between £100,000 and £125,140 the saving is around 62% plus the restored Personal Allowance, which is difficult to beat. Speak to a regulated adviser before committing, as this is not financial advice.

Do I pay National Insurance on a bonus?

Yes. Class 1 employee National Insurance applies at 8% on earnings between £12,570 and £50,270 and 2% above that. Because the rate drops rather than rises at the higher threshold, the NI element of a large bonus is often smaller than people expect. Your employer also pays secondary Class 1 NI on the bonus at 15%, which does not come out of your pay.

Does a bonus affect my tax code?

It can. If a bonus pushes your income into a new band, HMRC may adjust your code part way through the year to collect the right amount, which can make later payslips look lighter. Codes also change if HMRC estimates your income will stay at the higher level next year. Check your code against our tax code guide if the letters or numbers change unexpectedly.

Understanding how your bonus is taxed is one part of the picture. Making sure the underlying salary is right is the other, and that is usually where the bigger gains are. If you are weighing up a move, browse the latest openings on UK Jobs Alert, and if you want to strengthen the financial skills that tend to come with better-paid roles, Coffee & Study’s finance and accounting courses are a practical place to start.