Quick answer
A bonus is taxed in the same way as the rest of your pay, through PAYE. There is no special "bonus tax". It is added to your other earnings, so the rate you pay depends on your total income. In 2026/27, a basic-rate taxpayer usually keeps about 72% of a bonus (20% tax and 8% National Insurance) and a higher-rate taxpayer about 58%. Between £100,000 and £125,140 you keep only about 38%. A student loan takes another 9% above your threshold. Your bonus month can show more tax than this, but on a standard cumulative tax code the extra is usually given back on later payslips.
Getting a bonus is good news, until the payslip arrives and a big part of it has gone. This guide explains how much of a bonus you really keep in 2026/27, why the tax in your bonus month can look too high, and the legal ways to keep more of it.
How Much of Your Bonus You Keep (2026/27)
England, Wales and Northern Ireland, tax code 1257L, no pension contributions. Figures are the extra take-home pay for the whole tax year:
| Salary | Bonus | Tax and NI on the bonus | You keep |
|---|---|---|---|
| £30,000 | £1,000 | £280 | £720 (72%) |
| £35,000 | £3,000 | £840 | £2,160 (72%) |
| £35,000 with a Plan 2 student loan | £3,000 | £1,110 | £1,890 (63%) |
| £48,000 | £5,000 | £1,782 | £3,218 (64%) |
| £60,000 | £5,000 | £2,100 | £2,900 (58%) |
| £95,000 | £10,000 | £5,200 | £4,800 (48%) |
| £110,000 | £10,000 | £6,200 | £3,800 (38%) |
The £48,000 example is a mix. The first £2,270 of the bonus is taxed at 28% (20% tax plus 8% NI), and the rest is over £50,270 and taxed at 42% (40% tax plus 2% NI). The £95,000 example also crosses a threshold: the half above £100,000 loses Personal Allowance and is taxed at an effective 62%.
The rates behind the table
| Your total income (salary + bonus) | Income Tax | Employee NI | Kept from each £1 |
|---|---|---|---|
| £12,571 to £50,270 | 20% | 8% | 72p |
| £50,271 to £100,000 | 40% | 2% | 58p |
| £100,001 to £125,140 | 60% (40% plus the Personal Allowance taper) | 2% | 38p |
| Over £125,140 | 45% | 2% | 53p |
In Scotland, Income Tax rates are different (up to 48%). See Scottish Income Tax 2026/27.
Why the Tax in Your Bonus Month Can Look Too High
Most employees have a cumulative tax code such as 1257L. Each month, payroll compares your total pay so far this tax year with your tax-free allowance and tax bands so far this tax year. A large bonus early in the year can push your year-to-date pay over the higher-rate band for that point in the year, even if your annual income will stay under £50,270.
Example: £40,000 salary (£3,333 a month) and a £6,000 bonus paid in June, month 3 of the tax year.
| Payslip | Gross pay | Income Tax |
|---|---|---|
| April and May (each) | £3,333 | £457 |
| June – bonus month | £9,333 | £2,343 |
| July to October (each) | £3,333 | £286 |
| November onwards (each) | £3,333 | £457 |
In June, £1,886 of tax is taken on the bonus – about 31%. Over the following months the tax falls to £286 until the extra is given back. By the end of the year the bonus has cost exactly 20% in tax (£1,200), because £46,000 a year is all basic rate. Figures are rounded. Your payslip may differ by a few pounds because payroll uses HMRC's tax tables.
If your code has W1, M1 or X on the end (an emergency code), it is not cumulative, so any overpayment is not given back automatically through payroll. See our emergency tax guide and tax codes explained.
National Insurance on a Bonus: Often Less Than You Expect
Unlike Income Tax, employee National Insurance is worked out separately for each pay period. In 2026/27, monthly-paid employees pay 8% on pay between £1,048 and £4,189 a month and only 2% above that. A bonus month often goes over £4,189, so much of the bonus is charged at just 2%.
In the example above, the £6,000 bonus adds about £171 of NI in June, not the £480 (8%) you might expect. The NI is not recalculated at the end of the year, so you keep this saving. That means the £40,000 earner keeps about £4,629 of the £6,000 bonus (77%), not the 72% in the main table, which assumes the bonus is spread across the year.
This does not apply to company directors, whose NI is worked out on an annual basis, or to people who already earn over £4,189 a month.
Student Loans and Bonuses
Student loan repayments are also worked out on each payday, using a monthly threshold (for Plan 2, £29,385 ÷ 12 = £2,449 a month). In a bonus month you repay 9% of everything over that threshold. If your total income for the year ends up below your plan's annual threshold, you can ask the Student Loans Company for a refund of the bonus-month repayments. See how student loans affect a pay rise.
Ways to Keep More of Your Bonus
1. Bonus sacrifice into your pension
Many employers let you swap all or part of a bonus for an employer pension contribution. The amount you sacrifice is not paid as salary, so it avoids Income Tax and National Insurance. Some employers also add their 15% employer NI saving.
| £95,000 salary, £10,000 bonus | Taken as cash | Sacrificed into pension |
|---|---|---|
| Amount you receive | £4,800 in your bank account | £10,000 in your pension |
| Plus employer NI saving (if shared) | – | up to £1,500 more |
You must normally agree the sacrifice before the bonus is paid or you become entitled to it. Ask HR or payroll for the deadline. Money in a pension cannot normally be taken until age 55 (57 from April 2028).
From 6 April 2029, only the first £2,000 a year of pension contributions made through salary sacrifice will be free of National Insurance. Income Tax relief is not affected. See salary sacrifice explained.
2. Paying into a pension yourself
If your employer does not offer bonus sacrifice, a personal pension contribution still reduces your adjusted net income. That gets you Income Tax relief, and higher earners can claim extra relief through Self Assessment or by contacting HMRC. It does not save National Insurance.
3. Watch the £60,000 and £100,000 thresholds
- £60,000 to £80,000: if you or your partner claim Child Benefit, the High Income Child Benefit Charge claws back 1% of it for every £200 of adjusted net income over £60,000.
- £100,000 to £125,140: you lose £1 of Personal Allowance for every £2 of income, and over £100,000 you also lose Tax-Free Childcare and the extra free childcare hours. A bonus that takes you over £100,000 can cost far more than it looks. Read how the Personal Allowance works.
Pension contributions are one of the main ways to bring adjusted net income back under these limits.
Other Bonus Questions
- Bonuses after you leave: if a bonus is paid after your employer has issued your P45, it is usually taxed using code 0T on a non-cumulative basis, so all of it is taxed with no tax-free allowance. Any overpayment is sorted out after the year ends or when HMRC reviews your record.
- Christmas gifts and vouchers: small non-cash gifts can be tax-free under the trivial benefits rules if they cost £50 or less and are not a reward for work. A cash Christmas bonus is always taxed as pay.
- Bonus and Universal Credit: a bonus counts as earnings in the assessment period it is paid, which can reduce that month's Universal Credit.
- Bonus and your pension: check whether your workplace pension contributions are taken from bonuses. Many schemes take them from all qualifying earnings, including bonuses.
To see the effect on your take-home pay for the year, enter your salary and your salary plus bonus in our pay rise and take-home calculator.
Frequently Asked Questions
Is a bonus taxed at a higher rate than salary?
No. A bonus is taxed at the same rates as your salary. It only feels higher because it is added on top of your other income, so it is taxed at your highest rate, and because the bonus month can show extra tax that is given back later.
How much tax will I pay on a £1,000 bonus?
For a basic-rate taxpayer in England, Wales or Northern Ireland, £200 Income Tax and £80 National Insurance, leaving £720. A higher-rate taxpayer keeps about £580. A Plan 2 student loan above the threshold takes another £90.
Will I get the extra tax on my bonus back?
If you have a normal cumulative tax code and your bonus was over-taxed in its month, the extra is usually given back through lower tax on later payslips in the same tax year. If not, HMRC checks your record after the year ends and sends a P800 if you are due a refund.
Can I avoid tax on my bonus?
You cannot avoid tax on a cash bonus, but you can reduce it legally by sacrificing the bonus into your pension if your employer allows it, or by making pension contributions that lower your adjusted net income.
Does my employer pay National Insurance on my bonus?
Yes. Employers pay 15% employer NI on bonuses above the secondary threshold, which is why some share the saving when you sacrifice a bonus into your pension.