UK Bonus Tax Calculator

Bonuses in the UK are taxed as part of your regular income. HMRC does not apply a separate “bonus tax” — instead, your bonus is added to your salary and the combined total determines which tax bands apply. The incremental tax on the bonus is the difference between the tax on your salary alone and the tax on your salary plus bonus. This means the bonus is effectively taxed at your marginal rate.

Many people feel bonuses are taxed more heavily than their regular pay. This is usually because of employer withholding. When payroll processes a bonus in a single pay period, the software may annualise the payment — treating it as though you earn that amount every month. This pushes the calculated annual income into a higher tax band, resulting in more tax being deducted upfront. The cumulative PAYE system corrects this over subsequent pay periods, or you can claim a refund after the tax year ends.

National Insurance Class 1 applies to bonuses just as it does to regular earnings. For 2026-27, employee NIC is 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. Your bonus is combined with your salary for the pay period to determine the NIC due. Employer NIC is also charged on the bonus at 15%.

Scottish taxpayers pay Scottish income tax rates on their bonus, which differ from the rates in England, Wales, and Northern Ireland. Scotland has six income tax bands ranging from 19% to 48%, compared to three bands (20%, 40%, 45%) in the rest of the UK. National Insurance rates, however, are the same across the whole UK.

For high earners, a bonus can trigger the Personal Allowance taper. If your total income (salary plus bonus) exceeds £100,000, the Personal Allowance of £12,570 is reduced by £1 for every £2 above £100,000, disappearing entirely at £125,140. This creates an effective marginal rate of 60% in the taper zone — 40% income tax plus an extra 20% from losing the allowance. A bonus that pushes you into this range will cost significantly more in tax than the headline rate suggests.

Scenario: You earn £50,000 per year in England and receive a £10,000 bonus. You want to know how much of that bonus you will actually take home.

Step 1 — Tax on salary alone: On a £50,000 salary, you use your £12,570 Personal Allowance and pay 20% basic rate on the remaining £37,430. Income tax on salary: £7,486.

Step 2 — Tax on salary + bonus: Your total income is £60,000. Tax is calculated as: 20% on £37,700 (from £12,571 to £50,270) = £7,540, plus 40% on £9,730 (from £50,271 to £60,000) = £3,892. Total income tax: £11,432.

Step 3 — Tax on the bonus: The difference is £11,432 − £7,486 = £3,946 income tax on the bonus. This reflects £270 of basic rate band remaining (£50,270 − £50,000 = £270 at 20%) and £9,730 taxed at 40%.

Step 4 — National Insurance on the bonus: Your salary already exceeds the £50,270 upper earnings limit, so the entire bonus is subject to NIC at the 2% rate. NI on bonus: £10,000 × 2% = £200.

Total deductions on bonus: £3,946 + £200 = £4,146.
Net bonus: £10,000 − £4,146 = £5,854. Your effective tax rate on the bonus is 41.5%.