Should You Defer Your Bonus to the New Tax Year in England?

By Team SalaryCalculate · 7/21/2025

Dodging The Extra Dough, Eh? Weighing Up Whether Deferring Your Bonus to a New Tax Year in England is the Shrewdest Move.

Welcome to the heart of the bonus season—where the hard work pays off, and our bank accounts thank us! Long awaited office bonuses can feel like a pre-Christmas miracle but what if I told you there's a way it could be even more beneficial to you? Is your curiosity piqued? Well, here's the deal—deferring your bonus to the new tax year. Before you dismiss it outright or jump on the bandwagon, let's crunch some numbers and delve deeper into the world of bonus deferring.

Understanding Bonus Taxation

A basic requirement before making any decision - understand how your bonus is taxed. The exact amount deducted depends on your income tax band, which can be a tangled web of numbers if you're new to it. Navigate this labyrinth with our bonus tax rate explained guide which dissects all the nitty-gritty with simplicity and clarity.

When a Bonus Goes Beyond £100,000 - The Possible Pitfall

Earning six digits definitely has its royal moments, but let's not forget the bonus pushes you over £100000 in England issue. As soon as your total taxable income crosses the £100,000 threshold, the personal allowance – the amount you earn tax-free – shrinks by £1 for every £2 you earn above £100,000. Translate this into real figures, and your take-home bonus could be far less than you'd expect. If you would like a real-world comparison, this article lays out all the facts and figures in plain English.

However, if you decide to push your bonus into the next tax year - you escape this possible conundrum, at least for now!

To Defer or Not to Defer: Benefits and Drawbacks

The idea of deferring your bonus is to spread your income over different tax years, potentially minimising the amount of tax you pay overall. Sounds clever, right? But remember, such a decision is not a one-size-fits-all solution.

While deferring makes sense if it helps keep your income under the £100,000 mark, for some, it might not make much of a change. For instance, if you're already in the higher tax band, deferring might not reduce your tax bill significantly.

Also, worth considering is the imminent likelihood of tax hikes. In such a scenario, deferring may actually increase your tax liability. And then there's the question of whether you can afford to wait for your bonus. After all, financial stability in current times might be prioritised over future tax potentials.

Calculated Choices: For The Love of Numbers

If you love precision and want to know exactly how much of your bonus you'll be taking home, our bonus calculator is your best friend. It'll calculate your after-tax bonus based on where you live and the bonus amount. Say goodbye to guesswork and hello to informed decisions!

FAQs

Can a bonus push me into another tax band?

Yes, a bonus can significantly impact your income and potentially push you into a higher tax band.

Can deferring my bonus affect my company?

The company still pays the taxes at the end of their tax year. This means no financial impact is brought upon the company when you defer your bonus.

Can I decide when to receive my bonus?

This depends on your employer and their policies. Some employers may allow this flexibility; others may not.

Wrap Up

Counter-intuitive as it may seem, there can be wisdom in waiting to see your hard-earned bonus. The choice to defer your bonus to the next tax year hinges on several factors and is a very personal decision. Like all financial matters, it's crucial to understand the implications in depth, so make use of that calculator, do your research and, if necessary, seek advice from a financial advisor. After all, understanding your money is the surest way to make it work best for you!

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%.