The short answer
There is no special bonus tax. A bonus is added to your earnings and taxed like the rest of your pay, at the rates that apply to the top slice of your income. What makes bonuses confusing is when each deduction is worked out:
- Income Tax is worked out across the whole tax year, so over twelve months you pay the right amount for your total income.
- National Insurance and student loan repayments are worked out on each payment on its own. The bonus month is treated as if you earned that much every month.
So how much of a bonus you keep depends on your salary, where you live and how you are paid:
| Salary | Bonus | Income Tax | NI | You keep |
|---|---|---|---|---|
| £30,000 | £2,000 | £400.00 | £141.34 | £1,458.66 |
| £45,000 | £5,000 | £1,000.00 | £126.34 | £3,873.66 |
| £60,000 | £5,000 | £2,000.00 | £100.00 | £2,900.00 |
| £100,000 | £10,000 | £6,000.00 | £200.00 | £3,800.00 |
| £150,000 | £20,000 | £9,000.00 | £400.00 | £10,600.00 |
The £100,000 row stands out: someone on £100,000 keeps less of a £10,000 bonus than someone on £150,000 keeps of each £10,000 of theirs. That is the 60% trap, explained in section 5.
Income Tax on a bonus
Your employer runs PAYE on a cumulative basis. Each payday, payroll looks at everything you have earned so far this tax year, the tax-free allowance you have built up so far, and the tax already taken. It then deducts whatever is needed to bring the total up to date.
In the month a bonus is paid, that catch-up all lands at once. The bonus is taxed at your top rate, so a higher-rate taxpayer sees 40% of it go in Income Tax that month. Nothing is wrong: it is the tax the bonus adds to your year, collected in one go. Your other months are not affected.
- Normal month’s Income TaxSalary of £3,750£540.50
- Extra tax caused by the bonusAll £5,000 falls in the 20% band£1,000.00
- Income Tax in the bonus month£1,540.50
When the bonus month really is over-taxed
If you are on an emergency tax code such as 1257L W1 or M1, payroll ignores the rest of the year and taxes each payment on its own. A bonus on an emergency code can then be taxed as if you earned it every month. You get the overpayment back, either through a corrected code later in the year or a refund after the tax year ends.
National Insurance on a bonus
National Insurance works differently. It is charged on each payment using that pay period’s thresholds, and there is no end-of-year top-up or refund. For monthly pay in 2026/27 you pay 8% on earnings between £1,048 and £4,189 in the month, and 2% on anything above £4,189.
A bonus usually pushes the month well above £4,189, so much of it is charged at only 2%. This is why the National Insurance on a bonus is often far lower than people expect.
- Normal month: £3,750(£3,750 − £1,048) × 8%£216.16
- Bonus month: £8,750(£4,189 − £1,048) × 8% + (£8,750 − £4,189) × 2%£342.50
That is about 2.5% of the bonus, rather than the 8% you might assume. The effect is strongest for people paid monthly whose salary is close to £50,270, because almost the whole bonus sits above the monthly upper limit.
If you are paid weekly the same logic applies with weekly thresholds of £242 and £967, so a bonus in a weekly pay packet is even more likely to be mostly charged at 2%. Company directors are the exception: their NI is worked out on an annual basis, so a director’s bonus is charged as if it were spread across the year.
Student loan repayments on a bonus
Student loan repayments also use the pay period’s threshold. For Plan 2 in 2026/27 that is £29,385 a year, or £2,448.75 a month. In the bonus month you repay 9% of everything above £2,448.75, even if your yearly income would normally sit below the threshold.
- Income Tax on the bonus£400.00
- National Insurance on the bonus£141.34
- Student loan on the bonus£2,000 × 9%£180.00
If your total income for the year ends up below your plan’s threshold, you can ask the Student Loans Company to refund repayments taken in a bonus month. If it is above the threshold, the repayment is simply part of what you owe, and it reduces your balance.
Bonuses that cross a threshold
Tax bands work in slices, so a bonus that takes you over a threshold only pays the higher rate on the part above it. Even so, some thresholds have a much bigger effect than others. The chart shows how much of each extra pound goes in Income Tax and NI at each level of income, using the annual figures.
£50,270: the higher-rate threshold
Above £50,270 Income Tax rises from 20% to 40%. If your salary is £48,000 and you get a £5,000 bonus, £2,270 of the bonus is taxed at 20% and £2,730 at 40%. The bonus does not drag the rest of your pay into the higher band.
£100,000: the 60% trap
Between £100,000 and £125,140 your £12,570 tax-free allowance is withdrawn at £1 for every £2 of income. Each extra £1 costs 40p in tax plus 20p in lost allowance: 60% Income Tax, and 62% with NI. On a £100,000 salary, a £10,000 bonus loses £6,000 in Income Tax alone.
Scotland
In Scotland the 42% higher rate starts at £43,663, so a bonus reaches it sooner. On a £45,000 salary in Scotland the whole of a £5,000 bonus is taxed at 42%, which is £2,100 rather than £1,000 elsewhere in the UK. NI is the same everywhere.
Paying a bonus into your pension
Many employers let you sacrifice some or all of a bonus into your pension. You give up the cash, and your employer pays the same amount into your pension instead. Because the money never becomes pay, it escapes Income Tax, NI and student loan.
- Salary
- £100,000
- Income Tax
- £6,000
- National Insurance
- £200
- You keep
- £3,800
- Salary
- £100,000
- Income Tax
- £0
- National Insurance
- £0
- Into your pension
- £10,000
For someone in the 60% trap, sacrifice turns £3,800 of cash into £10,000 of pension. Your employer also saves 15% employer NI on the sacrificed amount, and some employers pass part or all of that saving into your pension.
A few limits apply:
- Total pension contributions are normally limited to £60,000 a year (the annual allowance), or less for some very high earners.
- Salary sacrifice cannot take your pay below the National Minimum Wage.
- Pension money is locked away until at least 55 (57 from 2028) and is taxed when you draw it, though usually 25% can be taken tax-free.
- The government plans to charge NI on salary-sacrificed pension contributions above £2,000 a year from April 2029. Income Tax relief is not affected, and nothing changes for 2026/27.
Ask before the bonus is paid
Bonus sacrifice has to be agreed before you become entitled to the money. Once the bonus has been paid, you can still pay it into a pension yourself and claim tax relief, but you lose the NI saving.
Does timing matter?
A bonus counts in the tax year it is paid, not the year it was earned. The tax year runs from 6 April to 5 April, so a bonus paid on 1 April and one paid on 10 April fall in different years.
That matters when your income changes between years, for example:
- You start a career break, parental leave or part-time work next year.
- This year’s income is already above £100,000 or £50,270 and next year’s may not be.
- You plan to retire, so next year’s income will be lower.
Employers rarely move bonus dates for one person, but if there is a choice it is worth checking which tax year gives the better result. For NI, it can help slightly to have a bonus paid in one month rather than split, because more of it then sits above the monthly upper limit.
- Before it is paidDecide on bonus sacrifice
Ask HR or payroll whether bonus sacrifice is available and the deadline to opt in.
- Bonus monthCheck your payslip
Expect a big tax figure, a modest NI figure and, if you have one, a student loan deduction.
- After 5 AprilCheck your P60
Your P60 shows the year’s total pay and tax. If tax looks too high, HMRC can refund it.
Bonuses, benefits and Child Benefit
A bonus can affect more than your payslip. Two cases catch people out most often.
Child Benefit
If your adjusted net income goes over £60,000, the High Income Child Benefit Charge claws back 1% of your Child Benefit for every £200 above it, and all of it at £80,000. A bonus that takes you from £58,000 to £63,000 can cost a family with two children several hundred pounds in Child Benefit on top of the tax. Paying part of the bonus into a pension lowers adjusted net income and can avoid this.
Universal Credit
Universal Credit is assessed monthly on what you are actually paid. A bonus usually reduces your award for the month it arrives, and a large one can affect the following months as well. Tell the DWP straight away if your bonus is paid outside your normal payroll.
Checking your bonus payslip
- Tax code. Make sure it is not an emergency code (with W1, M1 or X). If it is, ask payroll or HMRC to update it.
- Income Tax. The extra tax should be roughly the bonus multiplied by your top rate: 20%, 40%, 45%, or 60% in the trap.
- National Insurance. Expect it to be well below 8% of the bonus if your bonus month is above £4,189.
- Student loan. A deduction in the bonus month is normal, even if you do not usually repay.
- Pension. If your scheme takes a percentage of all pay, part of the bonus goes to your pension automatically.
A bonus or a pay rise?
Sometimes an employer offers a choice between a one-off bonus and a permanent pay rise of the same amount. For the first year the tax looks similar, but the two behave differently.
- Salary
- £45,000 → £48,000
- Income Tax
- £600
- National Insurance
- £240
- Kept in year one
- £2,160
- Salary
- £45,000
- Income Tax
- £600
- National Insurance
- £86.34
- Kept in year one
- £2,313.66
The bonus wins in year one because most of it lands above the monthly NI upper limit and is charged at 2%. But a pay rise is usually worth more over time:
- It is paid every year, not once, and future percentage rises are calculated on the higher figure.
- Employer pension contributions are normally a percentage of salary, so they rise too.
- Mortgage lenders give more weight to basic salary than to bonuses.
A bonus suits you better if it would otherwise push you over £100,000 or £60,000 permanently, or if you plan to pay it straight into your pension.