How Much Tax Will I Pay on My Bonus in 2025/26?

By Steve James21 February 20267 min read

A £5,000 bonus doesn't mean £5,000 in your pocket. If you're a basic rate taxpayer, you'll take home around £3,600. If you're a higher rate taxpayer, that drops to roughly £2,900. Here's why - and what you can do about it.

The Quick Answer

Your bonus is taxed at your marginal rate - the highest rate you're currently paying. It's not taxed separately or at a special "bonus rate." Your salary has already used up your personal allowance and lower tax bands, so your bonus sits on top and gets hit at whatever rate comes next.

For most people, that means:

Use the Bonus Tax Calculator to see your exact take-home figure.

Why Your Bonus Feels More Heavily Taxed Than Your Salary

It isn't - but the maths makes it feel that way.

Your salary benefits from the personal allowance (£12,570 of tax-free income) and the basic rate band (20% on the next £37,700). By the time your bonus arrives, those lower bands are used up. Every pound of your bonus is taxed at your highest rate.

Your regular monthly payslip already reflects the personal allowance spread across 12 months, so each month feels lighter on tax. A bonus in a single month doesn't get that same spreading effect - PAYE calculates it on top, and you feel the full hit.

This is also why your payslip in the month you receive a bonus can look alarming. HMRC's PAYE system may temporarily over-deduct if it treats the bonus as if you'll earn that amount every month. This usually corrects itself in subsequent payslips, but if it doesn't, you'll get a refund at year end.

Worked Example: £45,000 Salary + £5,000 Bonus

Let's say you earn £45,000 and receive a one-off £5,000 bonus.

Your total income is now £50,000. The personal allowance covers the first £12,570 tax-free. Everything from £12,571 to £50,000 is in the basic rate band at 20%.

On your £5,000 bonus specifically:

Real Example

£45,000 salary + £5,000 bonus

Deduction	Rate	Amount
Income tax	20%	£1,000
National Insurance	8%	£400
Total deductions	28%	£1,400

Take-home from bonus£3,600

Not great, but it could be worse. Now look at what happens when the bonus pushes you into a higher band.

When Your Bonus Crosses a Tax Threshold

This is where it gets expensive. If your salary is £48,000 and you get a £5,000 bonus, your total income is £53,000 - which means £2,730 of your bonus crosses the £50,270 higher rate threshold.

Real Example

£48,000 salary + £5,000 bonus

Portion of bonus	Income tax	NI	Combined rate
First £2,270 (up to £50,270)	20%	8%	28%
Remaining £2,730 (above £50,270)	40%	2%	42%

Take-home from bonus£3,297

That £2,730 crossing the threshold cost you an extra £303 compared to the basic rate.

Run your own salary and bonus through the Bonus Tax Calculator to see exactly where you land.

The £100K Trap: When Bonuses Get Really Painful

If your salary plus bonus pushes your total income above £100,000, things get much worse. Your personal allowance (£12,570) starts to reduce by £1 for every £2 you earn over £100,000. This creates an effective marginal rate of 60% on income between £100,000 and £125,140.

If this applies to you, read the full breakdown at £100K Tax Trap Explained.

How to Keep More of Your Bonus

The most effective legal strategy is bonus sacrifice - asking your employer to pay some or all of your bonus directly into your pension before tax is calculated. This means no income tax and no National Insurance on the sacrificed amount.

Using the example above (£95,000 salary, £15,000 bonus):

Take it as cash

Keep roughly £7,100 after tax and NI
£7,900 lost to deductions
Personal allowance taper applies
Taxable income: £110,000

Sacrifice to pension

Full £15,000 goes into your pension pot
No income tax or NI on the bonus
Taxable income stays at £95,000
Personal allowance taper avoided entirely

The trade-off is obvious: you can't spend pension money now. But if you're already saving for retirement, bonus sacrifice at these tax rates is hard to beat. A higher rate taxpayer sacrificing a £10,000 bonus effectively gets £10,000 in their pension for a "cost" of only £5,800 in lost take-home pay.

A few things to check with your employer first:

Timing matters

Not all employers offer bonus sacrifice - it has to be agreed before the bonus is paid, not after.

Annual allowance

Pension contributions count towards your £60,000 annual allowance (including employer contributions).

Future NI changes

From April 2029, the NI relief on salary sacrifice pension contributions will be capped at £2,000/year, though this doesn't affect the income tax savings.

Student Loans: The Deduction People Forget

If you're repaying a student loan, your bonus gets hit again. Repayments are calculated on income above the threshold for your plan:

Plan	Threshold	Rate
Plan 1	£24,990	9%
Plan 2	£27,295	9%
Plan 4 (Scotland)	£31,395	9%
Plan 5	£25,000	9%
Postgraduate	£21,000	6%

The Bonus Tax Calculator includes student loan deductions - select your plan and see the real number.

What to Do Next

Before your next bonus lands, check two things:

Check your thresholds

Where does your total income (salary + bonus) sit relative to the tax thresholds? If it crosses £50,270, £100,000, or £125,140, the tax hit escalates sharply.

Ask about bonus sacrifice

Does your employer offer bonus sacrifice into pension? If yes, and you're a higher rate taxpayer, the maths almost always favours sacrificing - especially if you're anywhere near the £100,000 personal allowance taper.

References

Income Tax rates and Personal Allowances - GOV.UK (accessed February 2026)
National Insurance rates and categories - GOV.UK (accessed February 2026)
Repaying your student loan - GOV.UK (accessed February 2026)
Salary sacrifice and pension contributions - GOV.UK (accessed February 2026)