How is a UK bonus taxed?

A bonus is taxed as ordinary employment income through PAYE. There is no special "bonus tax rate". For Income Tax the bonus stacks on top of your salary for the year; cumulative PAYE may take more in the bonus month, but that evens out over the year. Employee National Insurance is different: it is worked out for the pay period the bonus is paid in and is not evened out. For a monthly-paid employee, 8% applies to that month's pay between £1,048 and £4,189 and 2% above it, so most of a large bonus pays 2%. Company directors have an annual earnings period instead. The calculator assumes a monthly-paid employee who is not a director.

What is the marginal rate on a bonus inside the £100,000-£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 avoids this - the full £1 lands in pension without Income Tax or employee NI - but the sacrifice must be agreed before you become entitled to the bonus, not merely before it is paid (HMRC EIM42765; ITEPA 2003 s.18).

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 £100,000-£125,140 band where each cash pound costs about 62p. The trade-off is liquidity: you normally cannot take a pension before the normal minimum pension age, which is 55 now and rises to 57 from 6 April 2028 (Finance Act 2022 s.10). For high earners with adequate liquid savings, sacrificing the bonus is usually worth considering.

Why was so much tax taken out of my bonus payslip?

Two reasons. For Income Tax, cumulative PAYE only gives you the allowance and bands for the months so far, so a large bonus in (say) month 6 can be taxed at a higher rate that month; later months even it out and the year's Income Tax comes out right, unless you are on a week-1/month-1 code. National Insurance does not even out: it is settled on each month's pay, so the bonus month's NI is final.

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.

Tax on a £1,000 Bonus UK 2026/27

How much of a £1,000 UK bonus you actually keep depends entirely on your salary before the bonus. A £1,000 bonus on a £30,000 salary leaves the most cash in your pocket; the same bonus on a £105,000 salary can lose 62% to tax through the £100k Personal Allowance taper. Figures below assume England rest-of-UK rates, no pension contribution, and a monthly-paid employee who is not a company director, with the bonus paid in one month: employee NI is worked out on that month's pay (gov.uk monthly thresholds), Income Tax over the year. Directors have an annual earnings period (gov.uk), so their NI on a bonus can differ (higher or lower).

Take-home from a £1,000 bonus by base salary

Base salary	Bonus take-home	Effective marginal	Pension sacrifice value
£30,000	£720	28.0%	£1,000
£50,000	£633	36.7%	£1,000
£70,000	£580	42.0%	£1,000
£100,000	£380	62.0%	£1,000
£130,000	£530	47.0%	£1,000

Pension sacrifice value: the full £1,000 lands in the pension pot, free of Income Tax and employee NI. The "saving" vs cash is the difference between £1,000 and the cash take-home in the table above.

Worst marginal in the ladder

At a base salary of £100,000, the effective marginal rate on a £1,000 bonus is 62.0% - meaning only £380 of the £1,000 reaches your bank account. Salary-sacrificing the bonus into pension keeps the full £1,000 in your pot at the cost of liquidity: you normally cannot take a pension before age 55, rising to 57 from 6 April 2028 (Finance Act 2022 s.10).

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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". For Income Tax the bonus stacks on top of your salary for the year; cumulative PAYE may take more in the bonus month, but that evens out over the year. Employee National Insurance is different: it is worked out for the pay period the bonus is paid in and is not evened out. For a monthly-paid employee, 8% applies to that month's pay between £1,048 and £4,189 and 2% above it, so most of a large bonus pays 2%. Company directors have an annual earnings period instead. The calculator assumes a monthly-paid employee who is not a director.
What is the marginal rate on a bonus inside the £100,000-£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 avoids this - the full £1 lands in pension without Income Tax or employee NI - but the sacrifice must be agreed before you become entitled to the bonus, not merely before it is paid (HMRC EIM42765; ITEPA 2003 s.18).
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 £100,000-£125,140 band where each cash pound costs about 62p. The trade-off is liquidity: you normally cannot take a pension before the normal minimum pension age, which is 55 now and rises to 57 from 6 April 2028 (Finance Act 2022 s.10). For high earners with adequate liquid savings, sacrificing the bonus is usually worth considering.
Why was so much tax taken out of my bonus payslip?: Two reasons. For Income Tax, cumulative PAYE only gives you the allowance and bands for the months so far, so a large bonus in (say) month 6 can be taxed at a higher rate that month; later months even it out and the year's Income Tax comes out right, unless you are on a week-1/month-1 code. National Insurance does not even out: it is settled on each month's pay, so the bonus month's NI is final.
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.