Bonus tax calculator — what you actually take home
Your bonus is taxed at your marginal rate, not a flat 40% — and the scary deduction in the bonus month usually trues up by itself. Here's the honest picture.
Bonuses are taxed as ordinary income at your marginal rate — there's no separate bonus tax. A £5,000 bonus on a £40,000 salary keeps £3,600.00 after £1,400.00 of tax and NI (28% effective). Higher earners keep less (42% deductions above £50,270; 62% in the £100k taper zone). One-off bonuses often look over-taxed on the month's payslip; cumulative PAYE refunds the excess automatically.
- Personal allowance
- £12,570
- Applies in
- England, Scotland & Wales supported
- Calculation
- Taxed at your marginal rate, trues up in-year
Parsed as: 1257L (£12,570 allowance, England & NI)
Why the bonus month looks so brutal
PAYE works period by period: each month you get one-twelfth of your allowance and one-twelfth of each tax band. Drop a £5,000 bonus into a single month and that month’s income blows through its band slices — payroll taxes the excess at 40% (or 45%) even though your annual income never goes near those rates.
On a cumulative tax code the system self-corrects: every later payslip re-reconciles the whole year, quietly refunding the over-deduction month by month. You only need to act if you’re on a W1/M1 (non-cumulative) code — then the true-up waits for HMRC’s year-end reconciliation instead. The real cost of your bonus is the annual figure this calculator shows, not the bonus month’s payslip.
Questions people ask
Sources: Income tax rates · National Insurance rates · Income over £100,000