Bonus tax calculator
For 2026-27. A bonus is not taxed at a special rate — there is no such thing. But it is not treated identically to salary either, and the difference runs the opposite way to what almost everyone expects: taking the money as one lump sum usually costs less National Insurance than earning the same amount spread across the year.
Two rules that disagree with each other
Income tax is cumulative and annual. Your employer keeps a running year-to-date total and corrects itself every period, so by 5 April the only thing that matters is what you earned in total. Sweeping every salary from £0 to £150,000 through this site's engine, the largest income tax difference between taking £10,000 as a bonus and taking the same £10,000 as extra salary is £0. Timing changes nothing.
National Insurance is assessed per pay period, and never reconciled at year end. Each period stands alone with its own share of the thresholds. So the shape of your year — whether the money arrives evenly or in one spike — genuinely changes the bill.
On a £30,000 salary paid monthly, a £10,000 bonus attracts £1,695.75 of National Insurance across the year. The same £40,000 paid as an even salary attracts £2,194.40. Taking it as a lump sum is £498.65 cheaper, and the income tax is £5,486 either way.
Put another way: the bonus itself carries £301.35 of National Insurance, which is 3.0% of it. The same £10,000 added to the salary would carry the full 8%.
What is left of the bonus
—
Against the same money paid as salary
The payslip in the bonus period
Putting the bonus into your pension instead
How this was calculated
Why a lump sum is cheaper in National Insurance
Employee National Insurance has two rates. Earnings between the Primary Threshold of £12,570 and the Upper Earnings Limit of £50,270 are charged at 8%. Everything above the Upper Earnings Limit is charged at 2%. That is the entire structure, and the gap between the two rates is 6%.
The part that catches people out is that those are not annual thresholds. They are period thresholds. Paid monthly, your Primary Threshold is £1,047.50 for that month and your Upper Earnings Limit is £4,189.17 for that month, and the calculation starts again from scratch the following month. HMRC publishes them that way round:
“Over £967 a week (£4,189 a month): 2%” — gov.uk, verified 2026-08-08
So consider £30,000 a year paid monthly. Every ordinary month you are a long way below the monthly Upper Earnings Limit, which means every pound above the monthly Primary Threshold costs the full 8%. Then the bonus month arrives, your pay for that single period is £12,500, and the great majority of it sits above the monthly Upper Earnings Limit — where the rate is 2%. Take the same total as an even salary and not one pound of it ever reaches that limit, so all of it is charged at 8%. The saving is 6% of everything the lump sum pushed above the line — £498.65 in this case.
This has a clean maximum. The most the trick can be worth is when your ordinary pay sits just under the period limit and the bonus carries almost the whole of itself over it. For a £10,000 bonus paid monthly the engine finds that point at a salary of £40,270 — the Upper Earnings Limit less the bonus — where it is worth £550. Since only one period out of 12 carries the bonus, the most that can clear the limit is that fraction of it, which is why being paid more often makes the effect slightly larger:
| Paid | Period Upper Earnings Limit | Best possible saving | At a salary of |
|---|---|---|---|
| Monthly | £4,189.17 | £550 | £40,270 |
| Fortnightly | £1,933.46 | £576.92 | £40,270 |
| Weekly | £966.73 | £588.46 | £40,270 |
On a £10,000 bonus. The figures are found by sweeping the engine across every salary, not derived from a formula written into this page.
Where it disappears. Once your salary alone is at or above £50,270, every pay period is already over the limit before the bonus arrives. The bonus is charged at 2% whether it comes in one lump or twelve, and the saving is exactly zero — the flat stretch on the right of the chart. It also disappears at the other end: if the bonus is too small to lift a single period over the period limit, nothing crosses into the cheaper rate and there is nothing to save.
Where it reverses. At low pay the lump sum is actively worse. If your ordinary pay is below the Primary Threshold you pay no National Insurance at all in an ordinary period, and spreading the money keeps you there — while a lump sum drags a large slice of it through the 8% band in one go. The engine puts the worst case for a £10,000 bonus at a salary of £2,570, where taking it as a lump costs £371.83 more. That is the dip below the line at the left of the chart, and it is the honest counterweight to the headline.
Why the bonus period's payslip looks brutal
This is the complaint that actually brings people to a page like this, and it is a completely separate phenomenon from the National Insurance point above. The National Insurance on a bonus really is lower. The income tax in the bonus month really does look far too high — and then gives itself back.
PAYE works cumulatively. In each pay period your employer's software takes your pay to date, scales it up to what a full year at that rate would come to, works out the tax on that annual figure, takes the share of it belonging to the periods elapsed so far, and deducts whatever you have not already paid. For steady pay this is invisible and exact. For a spike it is briefly savage, because in the period the bonus lands your year-to-date pay looks like the earnings of a much richer person, and the software taxes you as though that rate of pay were going to continue.
Take the same example: £30,000 a year, a £10,000 bonus, paid monthly, bonus in the first period of the tax year. An ordinary period's income tax is £290.50. In the bonus period it is £4,475.25. But the tax genuinely attributable to the bonus over the whole year is only £2,000, so that single payslip has over-deducted £2,184.75.
Nothing needs to be claimed. The following period the same cumulative sum runs again with a year-to-date figure that no longer looks extreme, and the correction comes straight back through the payroll — the payslip after it shows a refund of £569.92 on the income tax line rather than a deduction. The whole of the over-deduction has unwound by the end of period 6, and from then on the deductions are the ordinary £290.50 again. Over the year you pay £5,486, which is exactly what you owe.
Two consequences worth taking from that. First, the further into the tax year the bonus lands, the less it over-deducts, because there is less of the year left to extrapolate over — by the final period the cumulative calculation is simply the annual one and there is no distortion at all. Second, the over-deduction is not a cost, only a cashflow. If you were budgeting around the bonus, budget around the annual figure this calculator gives you, not the payslip.
There are two cases where it does not fix itself. If your tax code ends in W1, M1 or X, payroll is operating it non-cumulatively: each period is taxed in isolation and nothing is ever carried forward, so the correction never arrives through payroll at all. What each tax code means covers how to tell and how to get it changed. And if you leave the job before the end of the tax year, there may be no later payslip to correct against — in that case the overpayment comes back after 5 April, either automatically through HMRC's end-of-year reconciliation or on a tax return if you file one.
Bonus sacrifice: the only real lever
By the time most people are looking at a bonus tax calculator, the bonus has already been decided and there is nothing to be done about the rates. The one exception is choosing not to take it as cash. A bonus can be sacrificed into your pension in exactly the way salary can, and because the whole of the bonus sits on top of your existing pay it is being taxed at your top rate rather than your average one — which makes it the most efficient money you will ever put into a pension.
The arithmetic is unusually simple: the cost of sacrificing the bonus is precisely the amount you would otherwise have taken home from it. At £30,000 with a £10,000 bonus, you would keep £7,698.65 of it, so putting the whole £10,000 into the pension costs you £7,698.65 of spending money and buys £10,000 of pension. The calculator above shows this for your own figures, including partial sacrifices, because giving up all of a bonus is a big ask and half of one usually is not.
There is also money in it for your employer, which is worth knowing when you ask. Sacrificed pay is not earnings, so their secondary National Insurance at 15% goes with it — £1,500 on this example. Many employers pass some or all of that into the pension on top; a good number do not, and it costs nothing to ask which yours does.
The timing rule that catches people out. A salary sacrifice is a change to your contract, and it has to be agreed before you become entitled to the money. If you have already been told the bonus is yours and then ask for it to go into your pension instead, that is not a sacrifice — it is you directing pay you are already entitled to, and it is taxed as earnings exactly as if you had banked it. If your employer runs a bonus exchange scheme there is normally a window each year for electing before the bonus is confirmed. Miss it and the option is gone until next year. Making a large personal contribution afterwards still gets you income tax relief, but not the National Insurance, which is roughly a third of the benefit at basic rate and a much smaller share above the Upper Earnings Limit.
The ceiling is the annual allowance: £60,000 for 2026-27, counting everything paid in by you and your employer together. That is generous enough that most bonus sacrifices never come near it, but it tapers for high earners — someone with threshold income of £210,000 and adjusted income of £280,000 has an allowance of £50,000, and a large bonus is exactly the thing that pushes someone over those tests. The pension tax relief calculator works out your own allowance and what relief you actually get.
One thing to know in advance: the National Insurance exemption on salary-sacrificed pension contributions is being capped at £2,000 a year, but not until the 2029-30 tax year. The Act has Royal Assent and a deferred commencement, so for 2026-27 the data layer this site calculates with records no cap, and applying one early would understate your take-home. The section that defers it is quoted in full on the methodology page.
What a bonus can quietly set off
A bonus is added to your income for every test in the tax system, and several of those tests have thresholds sharp enough that a one-off payment can push you through one for a single year. Each of these is a bigger number than the National Insurance effect this page opened with.
The Personal Allowance taper. Between £100,000 and £125,140 the allowance is withdrawn as you earn, and every pound in that band costs about 62p. A bonus that starts below £100,000 and ends above it is worth far less than it looks — and a sacrifice out of it is worth far more. The trap, and the contribution that clears it.
The High Income Child Benefit Charge. If anyone in your household claims Child Benefit, adjusted net income above £60,000 starts clawing it back, and by £80,000 all of it has gone. The charge falls on the higher earner individually rather than on the household, and a bonus is a common way of crossing into it for one year only. What the charge costs, and the contribution that removes it.
Student loan repayments. These are assessed per pay period like National Insurance, but unlike National Insurance there is no cheaper upper band to fall into — so where a bonus saves you National Insurance it does the opposite here. A large enough lump can trigger a repayment in that period even if your earnings for the whole year come to less than the annual threshold, and it is not refunded unless you ask. What each plan takes, and how to get it back.
For everything in one place — income tax, National Insurance, the pension methods, student loans and the child benefit charge together — use the take-home pay calculator. If the question behind yours is really about whether the pension route is worth it, the salary sacrifice guide goes through the mechanics and the things it can cost you.
What this calculator assumes
That the bonus is ordinary cash earnings paid through payroll in a single pay period, that your pay is otherwise level across the year, and that you are on a normal cumulative tax code with one employment. Shares, options and non-cash awards follow different rules and are not modelled here.
The period figures are the annual thresholds divided by your number of pay periods. Real payroll works from HMRC's tables, which round the period thresholds and the free pay to the penny or the pound, so a live payslip will differ from the model by small change. The direction and the size of every effect on this page are unaffected by that; the pennies are not worth reconciling.
Rates and thresholds are the published 2026-27 figures, last verified 2026-08-08, each one sourced on the methodology page. This is an information tool, not financial advice.
Bonus questions, answered before payday
- Why was my bonus taxed so heavily?
- Because National Insurance is worked out on each pay period separately, and payroll treats the month containing your bonus as though you earned that much every month. Income tax usually settles itself over the year; the National Insurance charged at the higher rate in that month does not come back.
- Will I get some of my bonus tax back?
- The income tax side often evens out over the following months, because most codes are cumulative and recalculate the year to date each time. What does not come back is National Insurance, which is why the total cost of a bonus is genuinely higher than the same money spread across the year.
- Can I put my bonus into my pension instead?
- Usually yes, and it is the cleanest form of salary sacrifice there is: a single payment, a single decision, and no permanent change to your contractual salary. The employer has to agree before the bonus is paid — once it is on the payslip it is too late.
- Does a bonus push me into a higher tax bracket for good?
- No. Bands apply to income for the year, not to a month, so a bonus only moves you up for the part of your income that lands above the boundary. The month it arrives can look like a permanent change, and it is not.