How to calculate tax on a bonus
A bonus is taxed as ordinary earnings, not at a special penalty rate. It feels heavily taxed because it lands on top of your salary, so most of it is taxed at your highest marginal rate — and payroll may treat the month as if you earned that much every month.
The rule
Bonus kept = bonus − (bonus × marginal income tax rate) − (bonus × social contribution rate)
Do it automatically — Bonus & commission taxStep by step
- 1Work out your annual salary without the bonus and find which band the top of it sits in.
- 2Add the bonus on top and see how much falls into each remaining band.
- 3Tax each slice at its band rate, then add social contributions at the rate that applies above the threshold.
- 4Deduct any pension contribution taken from the bonus — this can pull income back under a threshold.
What trips people up
- • A large bonus can push you over an allowance-taper or child-benefit threshold for the whole year.
- • Over-deduction in the bonus month usually corrects itself in later payslips under a cumulative tax code.
Common questions
Can I reduce tax on a bonus?
Sacrificing part of it into a pension is the most effective legal route, because the contribution is taken before tax.
Are bonuses taxed at 40%?
Only the part of the bonus that falls inside the higher band is — the rest is taxed at your lower band rates.
Skip the maths
See how much of a one-off bonus survives income tax and social contributions.
Open the how much of a bonus you keep tool