Calculate Your Bonus Tax
Enter your bonus amount and current salary to see how much tax you'll pay and your take-home bonus amount.
How is Tax Calculated on Bonuses?
Bonuses are typically taxed through PAYE (Pay As You Earn) in the UK. Here's how it works:
- Your bonus is added to your regular salary for tax calculation purposes
- Income Tax is calculated based on your total earnings (salary + bonus)
- National Insurance contributions are also calculated on the total amount
- The tax is deducted at source by your employer
For 2025/26, the tax bands are:
- Personal Allowance: £12,570 (0% tax)
- Basic Rate: £12,571 to £50,270 (20% tax)
- Higher Rate: £50,271 to £125,140 (40% tax)
- Additional Rate: Above £125,140 (45% tax)
Frequently Asked Questions
Why is my bonus taxed at a higher rate?
Your bonus might appear to be taxed at a higher rate because it's added to your regular salary for tax calculation purposes. This can push you into a higher tax band for that payment period. However, your overall tax liability is calculated on your total annual income, and any overpayment will be refunded through your tax code adjustment.
What is emergency tax on a bonus?
Emergency tax (BR, D0, or D1 tax codes) might be applied to your bonus if HMRC doesn't have enough information about your tax situation. This can result in higher tax deductions. You can claim back any overpaid tax through HMRC or wait for your tax code to be adjusted automatically.
Can I reduce tax on my bonus?
There are a few legitimate ways to reduce tax on your bonus:
- Salary sacrifice into your pension
- Spreading the bonus over multiple tax years (if possible)
- Claiming relevant tax reliefs and allowances
Always consult with a financial advisor for personalized advice.