Why did my bonus attract only 2% National Insurance?

Employee Class 1 National Insurance is generally worked out separately for each pay period. A bonus can affect the NI deducted in the period it is paid, but the result depends on pay frequency and earnings in that period. This calculator estimates annual NI and cannot predict your bonus payslip.

How does the £100k tax trap affect bonuses?

For many taxpayers, the Personal Allowance is reduced by £1 for every £2 of adjusted net income above £100,000. This creates an effective 60% marginal Income Tax rate over part of the £100,000 to £125,140 range in England, Wales and Northern Ireland. The effect on a bonus depends on your adjusted net income and circumstances.

What is bonus sacrifice and how does it save tax?

Some employers allow an employee to agree in advance that a bonus is paid as an employer pension contribution. The timing and scheme rules matter, and salary sacrifice can affect other benefits or thresholds. Ask your employer or pension provider for the terms; this calculator does not model pension arrangements.

Will my bonus increase my student loan deduction?

A bonus can affect student-loan deductions through payroll if earnings in the pay period exceed the threshold for your plan. The calculator excludes student loans, so check your payslip and the current GOV.UK guidance for your plan.

Marginal Tax Guide • 2026/27 HMRC Rules

Bonus After Tax Calculator UK

Estimate how annual Income Tax and employee National Insurance change when you add a bonus to salary. Compare the estimated amount retained with your gross bonus.

Annual Tax Estimate Annual NI Estimate No Payslip Prediction

Estimate tax on a bonus

Compare annual take-home before and after adding this employment income.

Annual salary before bonus (£)

Gross annual bonus (£)

2026/27 annual estimate for England, Wales and Northern Ireland. It compares annual Income Tax and employee NI before and after the extra earnings; it does not model a payslip or pay-period NI.

Estimated amount retained from bonus

£3,600.00

of £5,000.00 gross bonus

Extra Income Tax (annual difference): £1,000.00
Extra employee NI (annual difference): £400.00
Combined gross income: £50,000.00
Combined Income Tax: £7,486.00
Combined employee NI: £2,994.40

Estimate excludes pension contributions, student-loan repayments and other adjustments. Actual PAYE depends on your tax code and year-to-date pay. A bonus or commission is not necessarily paid or taxed as a separate annual amount.

Authored by: AfterTaxUK Editorial Team • Updated: 2026/27 Tax Year

Governed by ITEPA 2003 Section 62 & SSCBA 1992 Section 6

How Bonuses and Commission Are Taxed in the UK (2026/27)

In the United Kingdom, bonuses, annual gratuities, and performance commissions are not taxed under an independent separate rate. Under Section 62 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), all incentive payments are treated as regular employment earnings and added directly to your taxable compensation.

The added Income Tax depends on your annual income before and after the bonus; the whole bonus is not necessarily taxed at one rate. The calculator estimates the difference in annual Income Tax and employee NI and excludes pension contributions and student loans. See current GOV.UK Income Tax rates.

Worked Annual Bonus Estimate

For a £45,000 salary and £5,000 bonus, this annual England, Wales and Northern Ireland estimate compares the tax and NI before and after the bonus. It excludes student loans, pension contributions and pay-period payroll adjustments.

Item	Annual estimate
Gross bonus	£5,000.00
Additional Income Tax	£1,000.00
Additional employee NI	£400.00
Estimated amount retained from bonus	£3,600.00

How Pay-Period NI Differs from This Annual Estimate

Employee National Insurance on a bonus can differ from the annual estimate because payroll assesses earnings in each pay period. Under Section 6 of the Social Security Contributions and Benefits Act 1992 (SSCBA 1992), Class 1 National Insurance is calculated strictly on the current pay period without retrospective pooling.

The annual estimator uses annual NI thresholds to compare the year totals. Your employer calculates Class 1 NI for each earnings period, so the deduction on a one-off bonus can differ from the annual estimate. The amount depends on the pay period, the other earnings in it, and the applicable thresholds; this page does not predict that payslip result.

Pension Contributions and Bonus Sacrifice

A bonus can affect adjusted net income and the Personal Allowance taper above £100,000. The effect depends on your full-year income and circumstances; use the calculator as an annual estimate, not as advice on a pension contribution.

Some employers may agree before a bonus is paid to make an employer pension contribution instead. Scheme terms, timing and the effect on other benefits vary. This calculator does not model salary sacrifice or pension relief; check the arrangement with your employer or pension provider.

Frequently Asked Questions: UK Bonus Tax

Clear answers based on official HMRC rules and statutory guidance.

Employment bonuses are earnings for Income Tax and are usually paid through payroll. They do not have a separate tax rate: annual Income Tax depends on your total taxable income and circumstances. Employee National Insurance is assessed by pay period, so your payslip deduction may differ from this annual estimate.

Produced by the AfterTaxUK Editorial Team

Authored and verified by UK tax and payroll specialists in accordance with the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), Income Tax Act 2007 (Section 35), and Social Security Contributions and Benefits Act 1992 (Section 6). Calculations reflect the 2026/27 tax year.

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Annual employment estimate

Use the stated tax code and gross pay to compare employment deductions in England, Wales and Northern Ireland. Monthly, weekly and daily figures divide an annual result; they do not reconstruct cumulative payroll.

The main pension input models salary sacrifice. Irregular pay, benefits in kind, multiple employments and a different pension method can change a real payslip. Use the Scottish tool for Scottish employment income.

Check the rules for your circumstances

Official guidance supports the rules described here; it does not approve or certify this calculator. Confirm dates, eligibility and unsupported cases before making a financial decision.