Bonus Tax Calculator UK 2026

Bonuses are taxed as regular income in the UK. Your bonus is added to your annual salary, and the combined total determines your tax rate. You pay Income Tax at 20%, 40%, or 45% depending on your total earnings, plus National Insurance at 8% up to £50,270 and 2% above that threshold for 2026/27.

The effective tax rate on your bonus depends on where you sit in the tax bands. Basic rate taxpayers typically lose about 28% (20% tax + 8% NI), while higher rate taxpayers lose around 42% (40% tax + 2% NI) on the portion of the bonus in the higher band.

Your bonus is often taxed at your highest marginal tax rate because your regular salary has already used up your tax-free Personal Allowance and lower tax bands. If your salary is £40,000 and you receive a £10,000 bonus, the portion that pushes you into the higher rate band (above £50,270) will be taxed at 40% instead of 20%.

This is perfectly legal and standard HMRC practice. The tax system is progressive, meaning higher portions of income are taxed at higher rates. Your bonus sits "on top" of your existing salary in terms of tax calculation, so it faces the highest rates applicable to your total income.

Cumulative tax calculation considers your total year-to-date earnings when calculating tax on your bonus, which is usually more accurate. Non-cumulative (emergency tax codes like W1 or M1) calculates tax only on that pay period's earnings, often resulting in higher deductions initially. Non-cumulative codes are typically used when starting a new job without a P45.

With cumulative calculation, if you've been underpaying tax earlier in the year, your bonus month might see higher deductions to catch up. With non-cumulative, each month is treated independently, which can lead to significant overpayments that need to be reclaimed later. Always check your payslip to see which method applies to you.

Yes, bonuses are subject to National Insurance contributions at the same rates as your regular salary. For 2026/27, you pay 8% on earnings between £12,570 and £50,270, and 2% on earnings above £50,270. NI is calculated on a per-pay-period basis, so you'll pay more NI in the month you receive your bonus.

Unlike Income Tax which can be reclaimed if overpaid, National Insurance contributions are final. Once paid, they count towards your State Pension entitlement, so they do have long-term value even though they reduce your take-home pay immediately.

Legally, you can reduce tax on your bonus by paying it into your workplace pension as a salary sacrifice, which reduces your taxable income. You could also split your bonus across tax years if your employer agrees. However, any scheme claiming to eliminate bonus tax completely is likely illegal. Always consult a financial adviser for legitimate tax planning.

Other legal options include using your bonus to make Gift Aid donations to charity (which can extend your tax bands) or investing in tax-advantaged schemes like an ISA (though this doesn't reduce the initial tax, it protects future growth). Our salary negotiation calculator can help you evaluate different compensation structures.

No, Christmas bonuses and all other performance bonuses, annual bonuses, or one-off payments are taxed exactly the same way as regular income. The timing of when you receive it determines which tax year it falls into, but the tax rates remain the same as your standard PAYE income.

Whether it's called a Christmas bonus, 13th month salary, performance bonus, or any other name, HMRC treats all cash bonuses identically for tax purposes. Non-cash bonuses like company shares or benefits in kind may have different tax treatment and require separate calculations.

If you're on an emergency tax code (non-cumulative), you may be overtaxed initially. This typically corrects itself once your tax code is updated to cumulative. If it doesn't, you can reclaim overpaid tax through a P800 form at the end of the tax year or contact HMRC directly to update your tax code sooner.

You can check your tax code on your payslip or through your Personal Tax Account on GOV.UK. If it ends in W1, M1, or X, you're likely on an emergency code. Contact HMRC or your employer's payroll department with your P45 from your previous job to get this corrected and receive any refund due.

To calculate your bonus take-home pay, add your bonus to your annual salary to find your total income. Calculate Income Tax using the 2026/27 tax bands, then calculate National Insurance at 8% and 2% rates. Deduct any student loan repayments if applicable. Use our calculator above for an instant, accurate breakdown of your bonus deductions.

The manual calculation can be complex because you need to account for which portion of your bonus falls into each tax band. Our calculator handles all the complexity automatically, including Scotland-specific tax rates, cumulative vs non-cumulative methods, and pension contributions, giving you results in seconds.