Bonus Tax Calculator UK 2025/26

Bonus tax calculator UK 2025/26 — see net take-home from £1k-£50k bonus. PAYE deductions, marginal rate impact, salary s

Quick answer: On a £35k base salary, a £5,000 bonus is taxed at 28% (basic rate) = £3,600 net. On a £75k base, the same bonus is taxed at 42% (higher rate) = £2,900 net. Salary sacrifice the bonus into pension to save 28-62%.
Mustafa Bilgic
Reviewed by Mustafa Bilgic · UK Calculator Editor ·

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Annual bonuses are taxed at your marginal income tax rate plus NI. Because bonuses are paid as a lump sum, they often push you temporarily into a higher band — PAYE corrects this over remaining months. This calculator shows your real net bonus and explores tax-efficient strategies.

How bonus tax calculator works in 2025/26

How bonus tax is calculated:

  1. Bonus is added to gross monthly pay in the period it's paid
  2. PAYE applies cumulative tax on year-to-date earnings (annualised)
  3. If bonus pushes you into higher band, PAYE deducts at higher rate that month
  4. Subsequent months may see lower deductions as cumulative band catches up

Best strategies for higher-rate bonus earners:

  • Bonus sacrifice into pension — agree BEFORE bonus paid (HMRC rule). Saves 42% (higher) or 47% (additional). For £100-125k earners, saves 62% (PA taper).
  • Charity Gift Aid — extends basic rate band, can pull income out of higher rate
  • Spouse income shifting — if married, ensure efficient split via Marriage Allowance/charity gift aid
  • Carry forward unused pension AA — 3 prior years' unused £60k AA available, useful for one-off big bonus

Bonus + PA taper trap (£100-125k income):

If your base salary is £95k and you get a £20k bonus, your total = £115k. The bonus pushes you into PA taper. Effective marginal rate 62% on the bonus. You take home only £7,600 of the £20,000 bonus. Bonus sacrifice 100% into pension avoids this entirely.

Worked example: £35k base + £3k bonus, basic rate

Total £38k, all in basic rate band. Bonus taxed at 28% (20% IT + 8% NI). Net bonus £2,160. Take-home increase £2,160.

Gross: £3,000 → Take-home: £2,160.00/year (£180.00/month)

Worked example: £75k base + £10k bonus, higher rate

Total £85k. Bonus all in higher rate band. 40% IT + 2% NI = 42%. Net bonus £5,800. Sacrifice into pension would save the full £4,200.

Gross: £10,000 → Take-home: £5,800.00/year (£483.33/month)

Worked example: £95k base + £20k bonus, taper trap

Total £115k — straddles £100k. £5k of bonus at 42%, £15k at 62% (taper). Net bonus £2,100 + £5,700 = £7,800. Sacrificing entire £20k bonus into pension saves £12,200 of tax.

Gross: £20,000 → Take-home: £7,800.00/year (£650.00/month)

Frequently asked questions

Why is my bonus taxed at 40% when my salary is only £40k?
PAYE annualises your monthly pay. If you receive a £10k bonus in one month, your year-to-date total looks like £40k base + £10k YTD = £50k+ projected, triggering higher rate band. Subsequent months adjust downward as cumulative becomes correct.
Can I get a tax refund on a bonus?
Yes — if PAYE over-deducted (often happens with one-off bonuses), the over-payment self-corrects across remaining tax year via lower deductions. If you leave employer mid-year with over-deduction, HMRC refunds automatically.
What's "bonus sacrifice"?
Bonus sacrifice = formal agreement BEFORE the bonus is paid to redirect part/all of it into pension. Avoids income tax + NI on the sacrificed amount. HMRC requires the agreement be made BEFORE you have the right to receive the bonus (i.e. before payslip issued).
Can I carry forward pension AA to absorb a big bonus?
Yes — Annual Allowance £60k current year + 3 prior years' unused = up to £240k available for one-off big sacrifice. Useful for senior management bonus payments. Must have been a member of a UK pension scheme in the prior years.
Are deferred bonuses taxed when paid or when granted?
Deferred bonuses (e.g. shares, RSUs vesting in future) are taxed when they VEST and are paid — not when granted. RSUs taxed as employment income on vesting. Performance shares taxed at vesting based on FMV at that date.
What about share-based bonuses?
Different rules: ISO/EMI/CSOP options can have CGT-only treatment (qualifying conditions). RSUs are income tax + NI (employer + employee) on vesting. Share schemes are complex — get specialist advice for £20k+ awards.
Can I take some bonus as cash and some as pension?
Yes — most modern bonus sacrifice schemes allow split (e.g. 50% pension, 50% cash). Saves tax on the sacrificed portion only. Useful if you need some cash for immediate spending but want to save the rest tax-efficiently.

Official UK Sources

Last reviewed: May 2026 against HMRC 2025/26 rates.

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