Do You Pay National Insurance on Bonuses in England?

By Team SalaryCalculate · 7/21/2025

Understanding National Insurance on Bonuses: The Real Score

A sudden financial windfall, like a bonus, can be an exciting prospect. But amidst the jubilation, have you considered whether National Insurance (NI) deductions apply? In this post, we delve into the nitty-gritty of bonus taxation in England – specifically, do you pay National Insurance on bonuses? No frills or fuss, just straight talk here.

What's in a Bonus?

In general, employers provide bonuses to motivate, reward, and recognise staff. They signify a job well done and offer a financial boost beyond a regular salary.

And yes, you're right! This extra funding is ideal for splashing out on life's indulgences, socking away in savings, or even making additional contributions to a pension plan.

But let's talk turkey. A common assumption is that bonuses are free from statutory deductions like tax and National Insurance Contributions (NICs). Well, it might not be the most uplifting news, but the truth is, NICs are often deducted from bonus payments in the UK.

National Insurance on Bonuses: The Breakdown

National Insurance is a contribution paid by workers and employers in the UK to qualify for certain benefits, including the state pension. In simple terms, think of it as a kind of social security tax.

So, how does it affect your bonus? Like regular earnings, bonuses are also subject to both tax and NICs. Under UK law, all earnings over the National Insurance Primary Threshold (which is £9,568 for the 2021/2022 tax year) are subject to NICs at 12% for employees. If your bonus pushes you above this threshold, you'll be footing NI costs.

A point to remember? If your overall income (that's your regular salary AND bonuses) falls into the higher tax bracket, your NI contributions drop to 2%. So, if you earn £50,270 or more a year, you're in this club.

Impact on Pension Contributions

While we're on the subject of NI and bonuses, [let's talk about how pension contributions affect your bonus in England. This isn't often front of mind, but it’s an important factor to consider.

An increased income from a bonus could affect your pension contributions. Specifically, higher income might mean higher contributions if you’re enrolled in a company pension scheme where contributions are calculated as a percentage of your total earnings. As your earnings increase due to a bonus, so too would your – and possibly your employer's – pension contributions.

Figuring It Out: Try A Bonus Calculator

I know. All this sounds like a marathon maths session. So, to spare you the number-crunching headaches, use a bonus calculator to estimate your take-home bonus, after deducting income tax and NICs. This way, you’ll get a clear idea of your net bonus amount, without the need to dust-off any calculators or excel sheets!

FAQs on Bonus Deductions and National Insurance

Do employers also pay National Insurance on bonuses?

Yes, employers pay a different rate of NI contributions for their employees, including on bonus payments.

What happens if my bonus is paid in kind rather than cash?

If you receive a bonus in kind, like a company car or a fancy holiday, this may still count as 'earnings' and be liable for income tax and NICs.

Will my bonus affect my entitlement to benefits?

Possibly. Since NI funds an array of benefits, a bigger salary with bonuses might affect your eligibility for certain means-tested benefits.

Wrapping Up

In conclusion, bonuses can be a cause for celebration. But they're also subject to income tax and National Insurance. It's important to know this to manage your expectations and plan your budget.

So, the next time your employer mentions bonuses, you’ll be clued-up on how it could affect your pocket. Not just the “Yay, extra money!” part, but the real, after-the-deductions net amount that will actually land in your bank account.

How Bonuses Are Taxed in England (2024/25)

Bonuses are a great way to be rewarded for your hard work—but before you celebrate, it’s important to understand how they’re taxed. In England, bonuses are treated just like regular income, meaning they’re subject to Income Tax and National Insurance. The exact amount you take home depends on your total earnings for the year, your tax code, and even the month your bonus is paid.

Bonus Tax Calculator for England – How Much Will You Keep?

Bonuses are exciting—but before you plan how to spend yours, it’s worth asking: how much will actually reach your account? In England, bonuses are taxed just like your salary, meaning your take-home might be less than expected. That’s why a bonus tax calculator is so useful. By adding your bonus to your total income, HMRC determines your tax bracket. If your bonus pushes your income into a higher bracket, a larger portion is taxed at a higher rate—potentially up to 40% or even 45%. Plus, National Insurance still applies.

Why Your Bonus May Be Taxed at 40%, 45% or More in England

Bonuses in England are taxed just like your salary—meaning they can push you into higher tax bands. If your bonus lifts your total income above £50,270, you’ll be taxed at 40%. Over £150,000? That jumps to 45%. And if your income crosses £100,000, you start losing your personal allowance—effectively pushing your tax rate on part of your income to nearly 60%.