If you’ve ever received a bonus at work—or hope to—you’ve probably wondered: how much of it will actually end up in your bank account? In the UK, bonuses are taxed like regular income, but the impact can feel heavier than expected due to how they’re processed.
Let’s unpack how bonuses are taxed in 2025/26, and how you can estimate what you’ll really take home.
UK Salary & Tax Breakdown Calculator
If you live in Scotland, income tax is calculated differently.
Rates and thresholds set by Scottish Government.
A common tax code is “1257L” meaning £12,570 tax-free allowance. Check your payslip, P60, or HMRC letter for your correct code.
• Plan 1: Started before September 2012 in England/Wales
• Plan 2: Started after September 2012 in England/Wales
• Plan 4: Scottish students
• Postgraduate Loan: For master’s/PhD courses
Your payslip or SLC account will confirm your plan.
1. Bonuses Are Treated as Income
Bonuses are subject to the same deductions as your regular salary:
- Income Tax
- National Insurance (NI)
- Student Loan Repayments (if applicable)
- Pension Contributions (if your scheme includes bonuses)
Because they’re added on top of your regular pay, bonuses often push your total earnings into a higher tax bracket—at least temporarily.
Example: If you normally earn £3,000/month and get a £2,000 bonus, your payslip shows £5,000 that month. The bonus is taxed as if you earn that much every month, which can lead to a surprisingly high deduction.
2. National Insurance & Student Loans
Your bonus also attracts National Insurance:
- 8% between £12,570 and £50,270 (annually)
- 2% above that
If you repay a student loan, it applies here too:
- Plan 1: 9% over £26,065
- Plan 2: 9% over £28,470
- Plan 4: 9% over £32,745
- Postgraduate Loan: 6% over £21,000 (in addition to any of the above)
3. Bonus and Pension Contributions
Some employers deduct pension contributions from bonuses—especially auto-enrolment or salary sacrifice schemes. If your contribution is 5%, a £2,000 bonus would see £100 go directly into your pension.
If you’re using salary sacrifice, your gross bonus may be reduced before tax, which can help you save on Income Tax and NI. But it depends on your scheme rules.
4. Use a Bonus Calculator (Like Ours)
Bonuses can trigger a spike in deductions that doesn’t reflect your usual take-home rate. That’s why we’ve included a Bonus Calculator in our salary tool.
With it, you can:
- Compare your regular take-home pay vs a bonus month
- See how much tax, NI and student loan you’ll pay
- Test different bonus sizes and pension setups
While it can feel deflating to see how much is taken from your bonus, understanding how the system works helps you plan better. Consider adjusting your pension contributions or asking your employer if salary sacrifice applies to bonuses—it could boost your net gain.
And remember: it’s still extra money in your pocket. Just not quite all of it.