Bonus tax calculator

Is there a special tax rate on bonuses?

No. A cash bonus is pay, like your salary. Your employer adds it to your other earnings and takes income tax and National Insurance through payroll in the usual way (GOV.UK: bonuses). The rate you pay on a bonus is simply the rate on the top slice of your income: the same as you would pay on any extra pound of salary.

How this calculator works

We work out your take-home pay for the year twice: once on your salary alone, and once on your salary plus the bonus. The difference in income tax, National Insurance and student loan is what the bonus costs you, and the difference in take-home pay is what you keep. This uses the same steps as our salary calculator.

A worked example

On a salary of £45,000 in England, a bonus of £5,000 adds £1,000.00 of income tax and £400.00 of National Insurance, so you keep £3,600.00. That is 72% of the bonus.

Why you might keep less than you expect

• Crossing into a higher band. If the bonus takes your income into the higher rate band, the part above the line is taxed at the higher rate.
• The £100,000 trap. If the bonus takes your income over £100,000, your Personal Allowance starts to shrink, so part of the bonus is effectively taxed at a much higher rate.
• Student loans. Repayments are a share of your earnings above the threshold, so they rise with a bonus.

The month the bonus is paid

Payroll works out tax and National Insurance for the pay period the bonus is paid in. For National Insurance, the bonus is added to that period's normal pay and the total is checked against that period's thresholds (HMRC manual NIM08610). So the deduction on that payslip can look high or low. This calculator shows the effect over the whole tax year. Because payroll works pay period by pay period, your real deductions can differ. Read more on How we calculate.

What this calculator does not cover

• Bonuses paid into a pension through salary sacrifice, or bonuses paid as shares or vouchers.
• Pension contributions on your salary. For those, use the salary calculator twice, with and without the bonus.