Bonus Tax Calculator, 2026/27

How this is calculated

The calculator adds your bonus on top of your existing salary and works out income tax on the combined figure using the 2026/27 personal allowance of £12,570, basic rate band of £37,700 and additional rate threshold of £125,140. The tax already due on salary alone is subtracted, leaving the tax attributable purely to the bonus.

The same method is applied to employee National Insurance, which is charged at 8.0% between the primary threshold and upper earnings limit and 2.0% above it. Because the bonus sits on top of salary, it is often taxed at your highest marginal rate, which is why a bonus close to £100,000 total income can be taxed particularly heavily as the personal allowance starts to taper away.

Why the deduction feels higher than expected

Payroll software applies tax cumulatively, so a large one-off bonus can push part of your income into a higher tax band for that pay period even though your annual salary alone would not. This calculator shows the correct annual position, but your payslip in the bonus month may show a bigger deduction than your annual liability, with any overpayment usually correcting itself later in the tax year.

If your total income including the bonus crosses £100,000, you lose £1 of personal allowance for every £2 over that limit, creating an effective marginal rate above 60% on the slice between £100,000 and £125,140.

Ways to reduce the tax on a bonus

Sacrificing some or all of a bonus into a pension before it is paid avoids income tax and employee NIC entirely on the sacrificed amount, and your employer may also pass on some of its NIC saving. This only works if your employer agrees to the sacrifice before the bonus is contractually due.

If you run your own limited company, consider whether a dividend, rather than a bonus, is more tax-efficient once corporation tax and dividend tax are compared, particularly if you have profit reserves already taxed at the small profits rate.

Is a bonus taxed differently to salary?

No, a bonus is simply added to your other earnings for the tax year and taxed at your marginal rate. It is not subject to a separate 'bonus tax rate', although it may push some of your income into a higher band.

Why was more tax taken from my bonus payslip than expected?

PAYE is calculated cumulatively within the tax year, so a large bonus in one month can look like it pushes you into a higher band for that pay period. Any overpayment is usually corrected automatically in later payslips or through your tax return.

Can I avoid tax on a bonus by sacrificing it into my pension?

Yes, if your employer agrees before the bonus is due, sacrificing it into a pension avoids income tax and employee NIC on the sacrificed amount, and some employers pass on part of their own NIC saving too.

Does a bonus affect my student loan repayments?

Yes, a bonus counts as income for student loan repayment purposes, so it can trigger extra repayments in the pay period it is received, calculated on income above the relevant plan threshold.