Is It Better to Take a Bonus or Ask for a Raise in England?

By Team SalaryCalculate · 5/19/2025

Should You Take That Bonus or Push for a Raise in England: A Pragmatic Guide

Howdy! Today, we're going to get candid about money. We've all been there: An email pings in your inbox at work, and it's announcing you're up for a bonus. The pound signs start flashing in your eyes. Or maybe you've been baking in your role for a while, and you're decently dressed in experience, and it's about time for a significant raise. In England, when it comes to your annual remuneration, you're usually presented with two options - a bonus pay-out or a raise. Both sound fantastic, but which door conceals the grand prize, and which one's just the consolation?

Alright, straight to the point, let's dive into this!

Bonuses Explained

You know when your favourite game show host says, "choose wisely," they mean it, right? Bonuses are certainly enticing. It's a chunk of cash landing in your account all at once, which you can use to spruce up your life, pay off bills, or even start or beef up an investment. But wait! There's a catch.

The heart-racing game of bonuses involves an opponent - taxes. Yep, the government's cut. For example, with our bonus tax calculator for England, you can see how much tax you'd play on bonuses over a specific amount. Depending on the tax band you fall into (20%, 40% or 45%), your bonus may not be as juicy as you imagined.

Plus, it's essential to note that bonuses are not guaranteed. They usually depend on company performance, which beyond a point, you don't control.

The Beauty of a Raise

Now, let's flip to the next card, a raise. A pay increase means your salary packet gets a bit fluffier each month. This can have some significant benefits. For starters, it changes your baseline salary. This means in future job roles, your negotiation point for salary starts higher. And let's be frank, having a bit extra each month is a less flashy but more consistent way to improve your lifestyle. It might even mean you can start putting more away in savings for that dreamy house with the garden.

Don’t forget - your pension contribution is also based on your salary. So, if you opt for a rise in pay, your pension pot should also inflate. In fact, check out this article on how pension contributions affect your bonus in England). It’s a must-read if you’re weighing your options.

One possible downside to consider - a higher salary might push you into a higher tax bracket. But remember, only the part of your income above the threshold is taxed at the higher rate. To understand how different pay rates affect your bottom line, have a go with our hourly salary calculator. It's eye-opening!

Making the Right Choice

So, back to our original question. Is it better to take a bonus or ask for a raise in England? It really comes down to your needs, future plans, and how much you value stability against a one-time surplus.

For many, steady yearly increases in your salary might be a more reliable route to increase your earnings over the long term. However, if you're expecting a big-ticket expense or need a large amount of capital for a specific purpose, a bonus may be the golden ticket you need.

FAQs

What if I am offered both- a small bonus and a small raise?

If your employer is offering both, consider your immediate needs. If you're planning for an imminent large purchase, the bonus might be helpful. On the other hand, if you would prefer to improve your standard of living, a raise would be more beneficial.*

How should I negotiate for a raise?

Be prepared! Know your worth in the market, provide evidence of your performance, and clearly communicate why you feel you deserve an increase.

Is the bonus taxed more than a regular salary?

While the monetary value of the tax might be more because the bonus is an extra income, it's taxed at the same percentage as your regular salary depending on your tax band.

Well, that's it, folks. Remember, whether you opt for a raise or a bonus, it's about making your money work for you. And as we say in England, keep calm and carry on saving!