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Bonus Tax Calculator

2025/26

Enter your base salary and bonus to see exactly how much you keep after income tax and National Insurance. Results update instantly as you type.

How UK Bonus Tax Works in 2025/26

Bonuses are subject to both income tax and National Insurance in the same way as your regular salary. HMRC uses the aggregate method to calculate the tax on your bonus: your bonus is added to your annualised salary to determine your total taxable income, and the resulting tax is compared to the tax on your base salary alone. The difference is the tax on your bonus.

This means your bonus is always taxed at your marginal rate — the highest rate you pay on any part of your income. For most employees on a salary below £50,270, that is 20% income tax plus 8% National Insurance. If your combined salary and bonus pushes you above £50,270, the portion above that threshold is taxed at 40%.

If your total income (salary + bonus) exceeds £100,000 in a tax year, your personal allowance begins to taper away at a rate of £1 for every £2 over the threshold. This creates an effective 60% marginal tax rate on income between £100,000 and £125,140.

Bonus Tax Rates at a Glance

Total Income (Salary + Bonus)Income Tax on BonusNI on BonusCombined Rate
Up to £12,5700%0%0%
£12,570 – £50,27020%8%28.000000000000004%
£50,270 – £100,00040%2%42.00000000000001%
£100,000 – £125,14060% (effective, due to PA taper)2%62% (effective)
Over £125,14045%2%47%

Tips to Reduce Tax on Your Bonus

While you cannot avoid paying tax on a bonus entirely, there are legitimate strategies to reduce the amount deducted:

  • Pension salary sacrifice: Ask your employer to pay some or all of your bonus directly into your pension via salary sacrifice. This reduces your taxable income and avoids National Insurance for both you and your employer.
  • Personal pension contributions: Contributing to a personal pension (SIPP) after receiving your bonus still qualifies for tax relief, though NI will already have been deducted.
  • Timing of the bonus: If your employer has flexibility, receiving your bonus in the next tax year could be beneficial if your income will be lower then — for example, if you plan to reduce your hours or take a career break.
  • Charitable giving: Donations under Gift Aid can reduce your adjusted net income, which is particularly valuable if your total income is approaching the £100,000 personal allowance taper threshold.

Frequently Asked Questions

How is a bonus taxed in the UK?
In the UK, bonuses are treated as regular income and taxed using the aggregate method. HMRC adds your bonus to your annual salary to determine which tax band applies, then calculates the total tax on the combined figure. The tax already due on your base salary is subtracted, leaving the tax attributable to the bonus. This means your bonus is taxed at your marginal rate — not a fixed flat rate.
Why does my bonus seem to be taxed at a higher rate than my salary?
Your bonus is taxed at your marginal (highest) rate because it is added on top of your existing salary. For example, if your salary already takes you to the higher-rate tax band threshold, any bonus you receive will be taxed at 40%, even if most of your salary is taxed at 20%. This is correct and expected — you are not being double-taxed.
Do I pay National Insurance on my bonus?
Yes. Employee National Insurance is charged on your bonus in the same way as your regular salary. You pay 8% on earnings between £12,570 and £50,270 per year, and 2% on anything above £50,270. Because NI is calculated on a per-pay-period basis, a large bonus paid in a single month can push you into the upper NI rate for that month, even if your annual salary does not reach that threshold.
Can I reduce the tax on my bonus?
There are a few legitimate ways to reduce the tax impact of a bonus. Making pension contributions (especially via salary sacrifice) reduces your taxable income. If your salary is near the £100,000 threshold where the personal allowance starts to taper, making pension contributions can restore your full personal allowance. Asking your employer to spread the bonus across multiple pay periods can also prevent a temporary spike into a higher NI rate, though income tax will be the same across the year.
What is the effective tax rate on a bonus?
The effective tax rate on your bonus is the combined income tax and National Insurance you pay on the bonus amount, expressed as a percentage of the gross bonus. This is different from your overall effective tax rate on your salary. For a basic-rate taxpayer, the combined effective rate on a bonus is typically around 28% (20% income tax + 8% NI). For a higher-rate taxpayer it is typically around 42% (40% tax + 2% NI above £50,270).