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Bonus tax calculator 2026/27

Work out how much of your bonus you actually keep after income tax, National Insurance and any student loan. A bonus is taxed as ordinary earnings, but income tax is cumulative while National Insurance is worked out per pay period, which is why the payslip in your bonus month can look far worse than the real cost. This shows both figures, plus what happens if you put part of the bonus into your pension instead.

Where you live

Scotland sets its own income-tax bands. National Insurance and student loan rules are the same UK-wide.

Pension

Some schemes contribute on bonus payments, others count basic salary only. Check your scheme rules if you are not sure.

Move this to see what each £1 of cash you give up puts into your pension.

Student loan

You keep £0 0% of a £0 bonus · 2026/27
Bonus £0
Income tax −£0
National Insurance −£0
Effective deduction rate 0.0%
Marginal rate on the bonus 0.0%
Personal Allowance £0

The payslip in April

A normal month nets £0.

Gross pay £0.00
Income tax −£0.00
National Insurance −£0.00
Net pay £0.00

Cash or pension

Cash if you take it all £0
Cash you still get £0
Into the pension £0

Move the pension slider above to price up sacrificing part of the bonus.

Assumes twelve equal monthly pay periods, a standard cumulative tax code and one bonus in the year. A real payslip can differ if you are on a week 1 or month 1 code, have benefits in kind, or your pay changed mid-year.

How this is calculated

  1. We start with your salary and the part of the UK you live in, because Scotland has its own income-tax bands.
  2. We work out your income tax with the bonus and without it, then take the difference. That is the honest cost of the bonus rather than an average rate applied to the whole thing.
  3. Income tax is cumulative over the year, so we calculate it annually. If the bonus takes you over £100,000 we reduce your Personal Allowance, which is what makes that stretch so expensive.
  4. National Insurance and student loan are worked out for a single pay period, so we take the month the bonus lands, apply the monthly thresholds to that month of pay, and compare it with a normal month. This is why a big bonus in one month can cost less National Insurance than the same money spread across the year.
  5. Any pension contribution taken from the bonus comes off before tax. If you sacrifice part of the bonus it comes off before tax and National Insurance, and we show what each £1 of cash you give up puts into the pension.
  6. We then rebuild the payslip for the month the bonus lands, using the cumulative PAYE method against the allowance and band that have built up by that point in the year, so you can see what the payslip will say and how much of it comes back later.

Frequently asked questions

Is a bonus taxed at a higher rate than salary?

No. A bonus is ordinary earnings and is taxed at your normal rates. It lands on top of your salary, so the whole bonus is taxed at your highest rate and it can push part of your income into the next band. That is why it feels like a special bonus tax when it is really the top slice of your income.

Why was so much taken off my bonus, and do I get it back?

Income tax under PAYE is cumulative, so it is worked out on what you have earned so far this tax year against the slice of your allowance and basic-rate band that has built up so far. A large bonus early in the year is measured against a small slice of band, so too much tax comes off that month. That part corrects itself: you pay less over the following months and end the year on the right figure without claiming anything. National Insurance is different. It is worked out separately for each pay period and is never reconciled at year end, so the National Insurance on your bonus month is final.

Do I pay less National Insurance if my bonus arrives as one lump?

If you already earn above £50,270 a year, yes. National Insurance drops from 8% to 2% above the Upper Earnings Limit, and that limit applies per month, so a lump payment pushes most of the bonus into the 2% band for that month. Spreading the same money across twelve months would cost you more. If you earn well below the limit, the lump and the spread cost the same.

Should I put my bonus into my pension instead?

Bonus sacrifice means the money goes to your pension before income tax and National Insurance, so every £1 you give up in cash puts more than £1 into the pension. The calculator shows the exchange rate for your situation. The trade is access: pension money is locked until at least age 57 from 2028. It is worth most if the bonus would otherwise be taxed at 40%, at 42% or higher in Scotland, or if it crosses £100,000 where the Personal Allowance taper makes the effective rate 60%.

Does a bonus affect my student loan repayment?

Yes, and like National Insurance it is worked out per pay period. If your bonus month takes you over the monthly threshold for your plan, 9% of the excess comes off that month even if your annual income is below the annual threshold. If that is your situation you can ask the Student Loans Company for a refund after the tax year ends. It is not automatic.

Does Scotland tax bonuses differently?

Scottish income tax bands apply to your bonus in the same way they apply to your salary, so a Scottish taxpayer in the higher band pays 42% on the bonus against 40% in the rest of the UK, and 45% or 48% at the top. National Insurance and student loan repayments are set UK-wide and are identical either way. Use the Scotland toggle to see both.

Recommended reading
The Psychology of Money by Morgan Housel

A bonus is the classic windfall decision, spend it or invest it, which is the subject this book handles better than any other.

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This calculator is for general guidance only. It does not replace advice from a tax adviser or accountant on your personal circumstances.

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