Key facts at a glance
£10K bonus at £80K salary
£5,800
42% combined marginal rate
£10K bonus at £100K salary
£3,800
62% rate, the tax trap zone
Best way to protect it
Pension route
Bypasses tax entirely, not just defers it
Here is the answer for Bonus Tax UK 2026, before the mechanics: on a £10,000 bonus, a basic-rate taxpayer keeps roughly £7,200 (20% Income Tax + 8% NI), a higher-rate taxpayer keeps £5,800 (40% Income Tax + 2% NI), and if the bonus pushes your total income between £100,000 and £125,140 you lose your Personal Allowance and keep as little as £3,800, an effective 62% tax hit. Full band-by-band breakdown below.
A bonus is taxed at your marginal rate, the rate on the last pound you earn that year, not the average rate you pay across your whole salary. Because it lands on top of everything else, it almost always gets taxed harder than your regular pay. This matters more in 2026 than it used to: the Personal Allowance and the higher-rate threshold have been frozen for years while pay has kept rising, so more bonuses now land in the 42% zone, and a growing number cross into the 62% taper zone.
Skip the manual maths: get your exact net payout for your own salary and bonus.
Open the calculatorHow HMRC taxes a bonus in 2026
HMRC does not have a separate "bonus tax rate". A bonus is ordinary employment income, taxed through PAYE using the same Income Tax and National Insurance bands as your salary. What changes is where it lands: because it is added on top of everything you have already earned, it is taxed at your highest marginal rate for the year, not your average rate.
This is also why the payslip that includes your bonus can look brutally over-taxed. PAYE payroll software annualises whatever you are paid in a given month, meaning it briefly assumes you will earn that much every monthfor the rest of the tax year. A £10,000 bonus paid in one month can trigger an emergency-style deduction that is higher than your true annual liability. HMRC's cumulative PAYE system usually self-corrects within a pay cycle or two, refunding the excess automatically through your following payslips. If it does not correct itself by the end of the tax year, you can reclaim any overpayment directly from HMRC.
These bands apply to taxpayers in England, Wales, and Northern Ireland. Scotland runs its own Income Tax bands, so the figures above will differ if your PAYE tax code starts with S. See our Scotland Take-Home Calculator for the Scottish equivalent.
What a £10,000 bonus costs you, by salary band
Same £10,000 bonus, five different base salaries, five very different outcomes. Figures below are 2026/27 rates for a single taxpayer, calculated live from the same engine behind our Bonus Tax Calculator.
| Base salary | Marginal zone | Rate on bonus | You keep |
|---|---|---|---|
| £40,000 | Basic rate (entire bonus) | 28% | £7,200 |
| £60,000 | Higher rate (entire bonus) | 42% | £5,800 |
| £95,000 | Higher rate → Personal Allowance taper | 52% | £4,800 |
| £100,000 | Personal Allowance taper (the 60% trap) | 62% | £3,800 |
| £130,000 | Additional rate | 47% | £5,300 |
Assumes a single taxpayer, no pension contribution, no other deductions. Rates rise and fall with your specific base and bonus combination, run your own numbers on the calculator.
Worked example: £80,000 salary, £10,000 bonus
Your £80,000 base already sits above the £50,270 higher-rate threshold, so every pound of the bonus is taxed at 40% Income Tax plus 2% National Insurance, a 42% combined marginal rate.
Worked example: £100,000 salary, £10,000 bonus
At exactly £100,000, the entire bonus falls in the Personal Allowance taper zone. For every £2 you earn above £100,000, you lose £1 of Personal Allowance, which pushes the effective Income Tax rate on that slice to 60%. Add 2% National Insurance and the combined marginal rate is 62%.
The secret weapon: bonus sacrifice into your pension
Ask your employer to redirect the bonus into your workplace pension instead of paying it as cash, a mechanism known as bonus sacrifice. This is not a deferral, it is a genuine exemption: a bonus routed this way never counts as your taxable income in the first place, so Income Tax and National Insurance never apply to it. A £10,000 cash bonus at the higher rate nets you £5,800. The same £10,000 sacrificed into your pension arrives as a full £10,000 contribution, keep 100% of it.
Your employer benefits too: bonus sacrifice removes their 15% employer NI liability on that amount, which is usually why they will agree to it, and some employers pass part of that saving back into your pension contribution.
If your bonus falls in the £100,000-£125,140 taper zone, this move does double duty: it removes the bonus from your income calculation entirely, which also restores the Personal Allowance you would otherwise lose on the rest of your salary. At that income level, it is the single highest-leverage tax decision available to you, subject to your £60,000 annual pension allowance for 2026/27.
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Frequently asked questions
How is a bonus taxed in the UK in 2026?
A bonus is employment income, taxed under PAYE at your marginal rate in the pay period it lands, exactly like a slice of extra salary. There is no separate 'bonus tax rate'. Your employer deducts Income Tax (20% basic, 40% higher, 45% additional) and National Insurance (8% up to £50,270, 2% above) before you see it. What confuses people is that the bonus is calculated on top of your salary, so it gets taxed at your highest marginal rate, not your average rate. A £10,000 bonus on an £80,000 salary is taxed at 42%, not the roughly 29% effective rate you pay on your salary overall.
What is the UK 60% tax trap and does my bonus fall into it?
Between £100,000 and £125,140, HMRC withdraws your Personal Allowance at £1 for every £2 you earn above £100,000. That creates an effective 60% Income Tax rate on that slice: you pay 40% directly, plus 40% on the allowance you just lost. Add 2% National Insurance and the combined marginal rate in this zone is 62%. If your base salary sits below £100,000 but a bonus pushes your total income into this band, part or all of the bonus gets caught. At exactly £100,000 base plus a £10,000 bonus, the whole bonus sits in the 62% zone and you keep only £3,800 of it.
How much of a £10,000 bonus do I keep on an £80,000 salary?
£5,800. Your £80,000 base already sits above the £50,270 higher-rate threshold, so the entire bonus is taxed at 40% Income Tax plus 2% National Insurance: 42% combined. HMRC takes £4,200, you receive £5,800.
Can I reduce the tax on my bonus?
The one route that changes the outcome rather than just deferring it: ask your employer to pay the bonus directly into your workplace pension instead of as cash. A direct employer pension contribution bypasses Income Tax and National Insurance entirely, it is not taxed and then relieved, it is simply never taxed as income. At the higher rate, a £10,000 bonus taxed as cash nets you £5,800; the same £10,000 paid into a pension arrives as a full £10,000 pension contribution. If you are in the £100,000-£125,140 taper zone, redirecting the bonus also restores the Personal Allowance you would otherwise lose, which is the single highest-leverage move available in UK tax planning at that income level.
Does National Insurance apply to bonuses the same way as salary?
Yes. Class 1 employee National Insurance applies to bonus payments in the same pay period logic as salary: 8% on earnings between £12,570 and £50,270, 2% above that. There is no NI-free bonus allowance and no separate bonus NI rate. The only way to avoid NI on a bonus is to have it paid into a pension instead of as cash, which removes it from earnings entirely.
Is a signing bonus taxed differently from a performance bonus?
No. HMRC treats all cash bonuses identically for tax purposes, whether labelled a signing bonus, retention bonus, performance bonus, or discretionary payment. What matters is the total amount and where it lands relative to your other income for the tax year, not the label attached to it. If a signing bonus is paid before you have started earning a salary from the new employer in that tax year, it may land in a lower band than it would once combined with a full year's salary, which is worth checking with a payroll calculation before you negotiate the payment date.
Why does my bonus look like it was taxed at a much higher rate than normal?
Your employer's PAYE payroll software annualises whatever you are paid in a given month, briefly assuming you will earn that much every month for the rest of the tax year. A £10,000 bonus paid in one month can trigger a deduction that looks far higher than your true annual liability, sometimes at emergency-tax levels. HMRC's cumulative PAYE system usually self-corrects within a pay cycle or two, refunding the excess automatically through your following payslips. If your tax code or employment situation is unusual and it does not correct itself by the end of the tax year, you can reclaim the overpayment directly from HMRC.
Can I split my bonus into my pension over two tax years to reduce the tax?
No. Bonuses are taxed on the date they are actually paid to you, not when they were earned or awarded, so splitting the payment date does not change which tax year it falls into for PAYE purposes. What you can do instead is use your full annual pension allowance, £60,000 for 2026/27, to sacrifice some or all of a large bonus into your pension in one go, which removes it from your taxable income entirely rather than merely deferring it. If you have unused allowance from the three previous tax years, you may be able to carry that forward to shelter an even larger bonus in a single year.
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