How Much of My Bonus Will I Keep?
Quick Answer
If your salary plus bonus stays within the basic rate band (up to £50,270 total), you'll typically keep around 68-70% of your bonus after Income Tax and National Insurance. If it pushes you into the higher rate band, the portion above £50,270 is taxed more heavily — you'll keep closer to 58% of that portion.
How Bonuses Are Actually Taxed
A bonus isn't taxed at a special rate. It's simply added to your pay for that period and taxed using your normal tax code and the usual Income Tax and National Insurance bands — 20% Income Tax and 8% NI within the basic rate band, rising to 40% Income Tax and 2% NI above £50,270.
Because payroll calculates tax as if you earned that amount every pay period, a large bonus can look like it's taxed very heavily on your payslip — sometimes at close to 50% for that month. This is usually a timing effect: any overpaid tax is corrected automatically over the rest of the tax year, or refunded if not.
Approximate Keep-Rate Table
| Situation | Approx. % Kept |
|---|---|
| Bonus entirely within basic rate band | ~68-70% |
| Bonus portion above £50,270 (higher rate) | ~58% |
| Bonus portion above £125,140 (additional rate) | ~53% |
| Bonus sacrificed into pension | 100% (into your pension, tax-free at this stage) |
Worked Example
You earn £35,000 a year and receive a £5,000 bonus in one month. Your total annual income becomes £40,000 — still within the basic rate band. The bonus is taxed at 20% Income Tax (£1,000) and 8% NI (£400), leaving you with £3,600 of the £5,000 bonus — 72% kept.
If instead your salary was £48,000 and the £5,000 bonus pushed part of your income above £50,270, the portion above that threshold is taxed at 40% Income Tax plus 2% NI instead — reducing what you keep from that portion to around 58%.
Common Misunderstandings
- "My bonus is taxed at 50%" — usually a one-month payroll timing effect, not your real annual tax rate on the bonus.
- Bonuses don't have their own tax rate — they're taxed exactly like extra salary in that pay period.
- Pension sacrifice is often the most tax-efficient option if you don't need the cash immediately.