UK Bonus Tax Calculator 2026/27
Bonuses are taxed as ordinary employment income through PAYE - they stack on top of your salary and pay the marginal rate where they land. This calculator shows the cash take-home, the effective marginal rate on the bonus, and compares to salary-sacrificing the bonus into pension (the highest-yield tax move inside the £100k tax trap).
Why the marginal rate matters
A bonus that sits entirely within your current Income Tax band pays the band's rate plus the appropriate National Insurance percentage. A bonus that crosses a band threshold pays a blend. The trap to watch for is the £100,000-£125,140 Personal Allowance taper - any bonus pound landing there is taxed at an effective 62% (40% IT + 2% NI + 20% PA loss).
| Band | IT | NI | Effective marginal |
|---|---|---|---|
| Up to £12,570 (PA) | 0% | 0% | 0% |
| £12,571 to £50,270 (basic) | 20% | 8% | 28% |
| £50,271 to £100,000 (higher) | 40% | 2% | 42% |
| £100,001 to £125,140 (PA taper) | 40% | 2% | ~62% |
| Above £125,140 (additional) | 45% | 2% | 47% |
Worked examples (2026-27 England)
- £40k salary + £5k bonus£3,600 take-homeEffective marginal 28.0%Pension sacrifice saves £1,400
- £60k salary + £10k bonus£5,800 take-homeEffective marginal 42.0%Pension sacrifice saves £4,200
- £90k salary + £15k bonus (crosses £100k)£7,700 take-homeEffective marginal 48.7%Pension sacrifice saves £7,300
- £100k salary + £10k bonus (taper)£3,800 take-homeEffective marginal 62.0%Pension sacrifice saves £6,200
- £120k salary + £20k bonus (mixed bands)£9,829 take-homeEffective marginal 50.9%Pension sacrifice saves £10,171
- £130k salary + £20k bonus (additional rate)£10,600 take-homeEffective marginal 47.0%Pension sacrifice saves £9,400
Cite or embed - free under CC BY 4.0
Frequently asked questions
- How is a UK bonus taxed?
- A bonus is taxed as ordinary employment income through PAYE. There is no special "bonus tax rate" - the bonus stacks on top of your annual salary and is taxed at whatever marginal rates apply. In practice many payroll systems withhold extra tax in the bonus month under cumulative PAYE; this evens out across the year so the annual tax due is the same regardless of how it was spread.
- What is the marginal rate on a bonus inside the £100k-£125,140 band?
- Approximately 62% - 40% Income Tax + 2% National Insurance + 20% equivalent from the Personal Allowance taper. Every £1 of bonus that lands in this band keeps only 38p. Salary-sacrificing the bonus into pension before payment avoids this entirely - the full £1 lands in pension without being taxed.
- Should I salary-sacrifice my bonus into pension?
- It depends on your marginal rate and pension circumstances. The sacrificed bonus avoids both Income Tax and employee NI, so it is highly tax-efficient - especially in the £100k-£125,140 band where each cash pound costs 62p in tax. The trade-off is liquidity: pension money is locked until age 57 (rising to 58 in 2028). For high earners with adequate liquid savings, sacrificing the bonus is usually the right call.
- Why was so much tax taken out of my bonus payslip?
- PAYE typically uses a cumulative method that estimates your total annual income from the year-to-date figure and applies the appropriate rates. A large one-off bonus in (say) month 6 looks to PAYE like you are now earning double, so it withholds at the higher rate. Over the remaining months the system gradually corrects the over-withholding. The annual total comes out right.
- Does Scotland tax bonuses differently?
- Scotland has its own Income Tax bands above the UK Personal Allowance, so the rates applied to a Scottish bonus are different from the rest-of-UK. National Insurance is UK-wide and the same. The calculator above lets you switch region to match where you live.
- Are sign-on bonuses taxed the same?
- Yes - any contractual bonus, sign-on bonus, retention bonus or performance bonus paid through payroll is taxed as employment income. The only common bonus type with different treatment is a bonus paid into a separate Share Incentive Plan or other tax-advantaged scheme - those follow specific HMRC rules and are usually NOT taxed at the marginal rate.