Skip to main content

How is a bonus taxed in the UK? — UK Tax Calculator

UK Tax Calculator

How is a bonus taxed in the UK?guide2026/27 · Take-home & tax
Guide · updated for 2025/26

How is a bonus taxed in the UK?

A bonus is taxed as ordinary income — there's no special bonus tax rate — but it can look over-taxed in the month it lands because PAYE and National Insurance are worked out per pay period. Across the year it evens out.

There is no special bonus tax rate

A bonus is added to your normal pay and taxed at your usual income-tax rates. What surprises people is the size of the deduction in the bonus month — but that's a timing effect, not a different rate.

Why it looks over-taxed in the bonus month

PAYE spreads your tax-free allowance evenly across the year, so a big one-off payment can temporarily push that month's pay into a higher band and be over-withheld. National Insurance is worked out per pay period (not annually), so the spike is charged more NI in that month too.

You don't get a separate 'bonus refund', but if too much income tax was taken, PAYE self-corrects over the following months (or via your tax code), so across the full year you pay only the correct amount.

Paying a bonus into your pension avoids the tax

If you sacrifice the bonus into your pension, you pay neither income tax nor employee National Insurance on it — the whole amount goes to your pension instead of being taxed. For higher earners near £100,000 this can also keep you out of the 60% trap.

Common questions

Quick answers for the 2025/26 tax year. For guidance only — not financial advice.