Bonus tax calculator 2026/27
Enter your annual salary and bonus amount to see exactly how much of your bonus you keep after income tax and National Insurance in the 2026/27 tax year.
You keep from your bonus
£3,600
72% of your £5,000 bonus
How bonuses are taxed in the UK
In the UK, bonuses are treated as ordinary income and taxed under PAYE in exactly the same way as your regular salary. There is no special bonus tax rate — the tax you pay on a bonus depends on which income tax band the bonus pushes your total income into.
Bonuses are typically processed using the "non-cumulative" or "month-based" PAYE method, which annualises your pay for that single month. This can make a bonus appear to be taxed at a higher rate than expected, particularly if HMRC temporarily treats it as if you were earning that annualised amount all year. However, any overpaid tax is refunded through the PAYE system by the end of the tax year.
Marginal tax rates on bonuses
Your marginal tax rate — the rate applied to the last pound of income you earn — determines the tax on your bonus. For 2026/27, the effective marginal rates (income tax + National Insurance combined) are:
| Total income (with bonus) | Income tax | NI | Combined rate |
|---|---|---|---|
| Up to £12,570 | 0% | 0% | 0% |
| £12,571 – £50,270 | 20% | 8% | 28% |
| £50,271 – £100,000 | 40% | 2% | 42% |
| £100,001 – £125,140 (taper zone) | 60% | 2% | 62% |
| Over £125,140 | 45% | 2% | 47% |
How to reduce tax on a bonus
There are legitimate ways to reduce the tax you pay when receiving a large bonus:
- Pension salary sacrifice — if your employer allows it, you can agree to sacrifice part or all of your bonus into your pension instead of taking it as cash. The bonus never enters your pay and is therefore not subject to income tax or National Insurance.
- Pension contribution before self-assessment deadline — if you have already received a bonus that pushed you into the personal allowance taper zone (£100,000 – £125,140), making a personal pension contribution before 5 April can restore your personal allowance and reduce the effective tax rate back from 62% to 40%.
- Timing — if you have any flexibility over when a bonus is paid, receiving it in a tax year where your total income is lower may result in less tax overall.
Frequently asked questions
Why does my bonus appear to be taxed at a higher rate on my payslip?
When a bonus is paid alongside your regular salary in a single month, HMRC's PAYE system may temporarily annualise that month's earnings. For example, if your normal monthly salary is £3,000 and you also receive a £5,000 bonus, the payroll system might treat your income for that month as if you were earning £96,000 per year (£8,000 × 12), pushing some of it into the higher rate. This corrects itself over the rest of the tax year as the cumulative PAYE system recalculates.
Is there any way to receive a bonus tax-free?
The most common route is directing a bonus into a pension via salary sacrifice, which avoids both income tax and National Insurance entirely. There is no general tax exemption for cash bonuses in the UK. Non-cash benefits can sometimes be structured more efficiently but generally trigger benefits-in-kind tax.
Do bonuses affect my student loan repayments?
Yes. Student loan repayments through PAYE are calculated based on your total income in each pay period, including bonuses. If a bonus pushes your earnings above the monthly threshold equivalent, repayments will be deducted from the bonus in the month it is paid.