UK Bonus Tax Calculator

There is no special bonus tax rate. Your bonus is added to your salary and taxed at whatever rate that slice falls into. If salary plus bonus stays under £50,270 you pay 20% Income Tax and 8% National Insurance, so you keep 72%. If the bonus sits entirely above £50,270 you pay 40% and 2%, keeping 58%. On a £60,000 salary with a £10,000 bonus, £4,000 goes in Income Tax and £200 in National Insurance, leaving £5,800.

Because it sits on top. Your Personal Allowance and basic rate band are already used up by your salary, so the whole bonus is taxed at your highest marginal rate rather than at your average rate. A person on £48,000 whose average tax rate is around 19% can still see 40% taken off the top of a bonus that pushes them past £50,270. The bonus has not been treated differently — it has just landed in a worse band.

PAYE operates on a period basis. When a large bonus is paid in one month, the payroll system may treat that month's pay as if it were your normal monthly pay, projecting an annual income far higher than reality and deducting accordingly. This usually corrects itself over the remaining months of the tax year through cumulative PAYE. If the year ends and you are still overpaid, HMRC should issue a refund after the year end, or you can claim it back directly.

If you do not need the cash, it is usually the single most efficient thing you can do with it. Under a salary sacrifice arrangement the bonus never becomes your pay, so it escapes both Income Tax and employee National Insurance. A £10,000 bonus sacrificed by a higher-rate taxpayer puts the full £10,000 into the pension instead of £5,800 into your bank account. Many employers also pass on some of their own National Insurance saving, increasing it further.

Yes. Employee Class 1 National Insurance applies to bonuses exactly as it does to salary: 8% on earnings between £12,570 and £50,270, and 2% above the upper earnings limit. That is why the marginal deduction on a bonus is 28% for a basic-rate earner but only 42% for a higher-rate one — the NI rate drops from 8% to 2% at the same point the Income Tax rate rises from 20% to 40%.

The band between £100,000 and £125,140, where the Personal Allowance is withdrawn by £1 for every £2 of income. On top of 40% Income Tax and 2% National Insurance, the lost allowance adds another 20 percentage points, giving an effective marginal deduction of 62%. A bonus that takes you from £95,000 to £115,000 is taxed far more harshly than one that takes you from £130,000 to £150,000. Model it on our [60% tax trap calculator](/resources/calculators/uk-60-percent-tax-trap-calculator).

No. UK Income Tax is charged in slices, so only the portion of your income that falls above a threshold is taxed at the higher rate. Crossing £50,270 does not cause your salary to be retaxed at 40% — only the pounds above £50,270 are. The one genuine cliff is at £100,000, where allowance withdrawal begins, and the loss of tax-free childcare and the free hours entitlement for parents, which disappear entirely rather than tapering.

It depends on your salary. On a £35,000 salary you keep £7,200, since the whole bonus is taxed at 20% plus 8% NI. On a £60,000 salary you keep £5,800, at 40% plus 2%. On a £105,000 salary you keep about £3,800, because the Personal Allowance taper adds an effective 20 points. On a £150,000 salary you keep £5,300, at 45% plus 2% — better than at £105,000, which is the counter-intuitive effect of the taper.

Not in terms of the amount ultimately due, but the timing matters for which tax year it falls in. A bonus paid on 3 April falls into the tax year ending 5 April; one paid on 10 April falls into the next year. If you expect lower income next year, or you are hovering near £100,000 this year, asking whether the payment date can be moved a few days is a legitimate and sometimes very valuable question — but it must be agreed before you become entitled to the bonus.

Usually yes, subject to your employer's scheme rules, the annual allowance, and the requirement that sacrifice cannot take your pay below the National Minimum Wage. The annual allowance is the practical constraint for high earners, since it is tapered for those with high adjusted income and unused allowance from the previous three years may need to be carried forward. Check the position on our [pension annual allowance calculator](/resources/calculators/uk-pension-annual-allowance) before agreeing a large sacrifice.

Yes. Student loan repayments are a percentage of earnings above the plan threshold, and a bonus increases earnings in the month it is paid, so a repayment is deducted from it. Unlike Income Tax, student loan deductions are generally not recalculated cumulatively across the year for employees, so a one-off bonus can trigger a repayment even if annual earnings are below the threshold. This calculator does not include student loan deductions.

Not exactly. It uses the Income Tax rates and bands for England, Wales and Northern Ireland. Scotland sets its own rates and bands, which include additional intermediate and advanced bands and a higher top rate, so a Scottish taxpayer's Income Tax on a bonus will differ. National Insurance is UK-wide and the same everywhere, and the Personal Allowance and its £100,000 taper are also UK-wide, so those parts of the result hold.

Twice over, at least on paper. The UK taxes it through PAYE, and because the US taxes its citizens on worldwide income you must also report it on your Form 1040. Relief usually comes through the foreign tax credit, since UK rates are generally higher, but timing is the difficulty: the UK tax year ends 5 April and the US one on 31 December, so the credit does not always line up with the income. See our guide to [the foreign tax credit and the FEIE](/resources/blog/foreign-tax-credit-vs-feie).

Not necessarily, and this catches Americans out. A sacrifice that saves 62% of UK tax may get very different treatment on your US return, since US recognition of UK pension contributions depends on the scheme and on the US/UK treaty. You can end up with full UK relief and no US relief, leaving US tax due on income the UK has already sheltered — and fewer UK taxes paid means a smaller foreign tax credit. Read our guide to [US tax on UK pensions and SIPPs](/resources/blog/us-tax-uk-pensions-sipps) before sacrificing a large bonus.

Generally yes. A payment made as an inducement to take up employment is earnings and is taxed through PAYE with National Insurance in the normal way. The same applies to retention bonuses and most contractual termination-related payments. Genuine ex gratia termination payments can qualify for the £30,000 exemption, but the distinction is technical and HMRC scrutinises it closely — do not assume a payment labelled ex gratia qualifies.

Shares delivered as remuneration are generally taxed as employment income on their market value at vesting, with PAYE and National Insurance applied where the shares are readily convertible assets. Any growth after that point is a capital gain rather than income. For an American in the UK the mismatch between UK and US vesting and sourcing rules is a recurring problem — see our guide to [US/UK tax on RSUs and stock options](/resources/blog/us-uk-tax-rsus-stock-options).

It applies the 2026-27 Personal Allowance, taper, Income Tax bands and employee Class 1 National Insurance rates exactly, and derives the marginal rate from the computation rather than assuming a figure. It calculates on an annual basis, so it shows the correct position for the tax year as a whole rather than what a single payslip will show. It excludes student loan repayments, the High Income Child Benefit Charge, benefits in kind, the tapered annual allowance and Scottish rates.

The calculation runs entirely in your browser and nothing is stored unless you choose to download the branded PDF report, at which point you provide your name and email so we can send it. Phone and address are optional.

If the bonus takes you near £100,000, close to the tapered annual allowance, or you have US filing obligations alongside your UK ones, the decision is worth modelling before the payment date rather than after — once the bonus is paid, the sacrifice option has gone. Book a free 20-minute call with a TaxStone adviser to look at the UK and US positions together.