Guide · tax year 2026/27
How bonuses are taxed
Why there is no special bonus tax rate, and why a bonus can still feel heavily taxed.
A lot of people believe bonuses are taxed at a special, higher rate. They are not. A cash bonus is pay, and it is taxed like the rest of your pay. But a bonus can still lose a surprisingly large share to deductions, and the payslip it arrives on can look odd. This guide explains why, using 2026/27 rules.
There is no special bonus tax
When your employer pays you a cash bonus, it counts as earnings. GOV.UK tells employers to add it to the employee's other earnings and deduct PAYE tax and Class 1 National Insurance through payroll (GOV.UK: bonuses). So the tax on a bonus is just the tax on the top slice of your income for the year: the same as you would pay on any extra pound of salary.
What decides how much you keep
Because a bonus sits on top of your salary, what you keep depends on which bands it falls into.
- Inside the basic rate band. On a salary of £30,000, a bonus of £2,000 is taxed at the basic rate of 20%, plus National Insurance. You keep £1,440.00, which is 72%.
- Crossing into the higher rate. On £48,000, a bonus of £5,000 takes part of your income into the higher rate band. You keep £3,217.80, or 64.36%.
- Over £100,000. On £100,000, a bonus of £10,000 also starts to remove your Personal Allowance. You keep £3,800.00, only 38%. See the £100,000 tax trap.
Student loan repayments also rise with a bonus, because they are a share of your earnings above the threshold.
Why the bonus payslip looks strange
Payroll works out deductions for the pay period the bonus is paid in. For National Insurance, the bonus is added to that period's normal pay and the contribution is worked out on the total (HMRC manual NIM08610). So the deductions on that one payslip can look high or low compared with a normal month.
Our bonus tax calculator works out the effect over the whole tax year: your take-home pay with the bonus minus your take-home pay without it. Because payroll works pay period by pay period, your real deductions can differ.
A worked example in full
On a salary of £48,000 with a bonus of £5,000:
- income tax goes up by £1,546.00;
- National Insurance goes up by £236.20;
- so you keep £3,217.80 of the £5,000.
Scotland
Scottish taxpayers pay Scottish income tax on a bonus, as on the rest of their pay. On the same £48,000 salary and £5,000 bonus, a Scottish taxpayer keeps £2,663.80. See Scottish income tax explained.
Bonuses and pensions
Some employers let you put a bonus into your pension through salary sacrifice. Our calculator does not cover this. If it is offered, the rules in salary sacrifice or net pay? explain why it can change the deductions, and your employer can tell you how their scheme works.
What you keep at different salaries
| Salary | Bonus | You keep | Share kept |
|---|---|---|---|
| £25,000 | £1,000 | £720.00 | 72% |
| £40,000 | £3,000 | £2,160.00 | 72% |
| £60,000 | £5,000 | £2,900.00 | 58% |
| £140,000 | £10,000 | £5,300.00 | 53% |
The share you keep falls as your salary rises, because the bonus lands in higher bands. The share is lowest for bonuses that fall inside the Personal Allowance taper. Above the point where the allowance is gone, the share kept goes up again, because the additional rate plus National Insurance is lower than the effective rate inside the taper.
A bonus with a student loan
On £40,000 with a Plan 2 loan, a £3,000 bonus adds £270.00 to your student loan repayment, as well as income tax and National Insurance. You keep £1,890.00.
A bonus and Child Benefit
A bonus can also bring the High Income Child Benefit Charge into play. For a family with two children, if the higher earner's adjusted net income is £58,000, there is no charge. If a bonus takes it to £63,000, the charge is £350, on top of the income tax and National Insurance on the bonus. That is one reason a bonus in that income range can feel smaller than expected.
Before the bonus arrives
It helps to work out what you will keep before you plan how to spend or save a bonus. Enter your salary and the bonus in our calculator, and include your student loan if you have one. The answer is what the bonus is worth to you over the year.
Common questions
Will I get some of the tax back at the end of the year?
That depends on your circumstances. Our yearly calculation shows what the bonus should cost over the year, but your real deductions can differ because payroll works pay period by pay period.
Does a bonus affect Child Benefit?
It can. A bonus raises your adjusted net income, which can trigger or increase the High Income Child Benefit Charge.
General information for the 2026/27 tax year, not financial or tax advice. We are not HMRC. Found a mistake? See our corrections policy.