How Bonuses Are Taxed in England (2024/25)

By Team SalaryCalculate · 7/21/2025

Whether you're lucky enough to receive a Christmas bonus or to receive a loyalty bonus from your employer, you might be left scratching your head on how to account for the extra income. Bonuses are a fantastic way employers reward their employees for a job well done, but it comes with a little catch — taxes. Before you go about spending your windfall, it's crucial to know how bonuses are taxed in England and understand the ins and outs of the associated implications.

Bonuses: What's Your Real Take-Home?

Bonuses, much like your salary, are subject to tax and National Insurance contributions. But, you might wonder, what's the exact percentage? Well, the answer to that lies in your tax band, which is determined by your total annual income, including the bonus.

If your income (salary and bonus combined) for the tax year 2024/25 does not exceed £50,270, you'll fall into the basic tax rate band of 20%. However, if your total income is between £50,271 and £150,000, you'll be taxed at a higher rate of 40%. And last but not least, if your total income exceeds £150,000, you'll be hit with the highest tax rate, a hefty 45%.

These are just the general figures - to make things simpler, use this handy bonus tax calculator for England to get a precise picture of what your take-home bonus would be!

National Insurance and Bonuses

"But hang on, what about National Insurance?" Good question! Yes, you do have to pay National Insurance on bonuses in England.

National Insurance is a contribution employees and businesses make to qualify for certain benefits, including the state pension. For the tax year 2024/25, if your annual earnings exceed £9,568, you'll pay 12% National Insurance on your earnings (including bonuses) up to £50,270 and 2% on any income above that. Check out this article on do you pay national insurance on bonuses in England to help clarify this aspect of bonus taxation.

Net Salary and Bonus: Cracking the Numbers

Using a net salary calculator is a great way to understand your total yearly income, calculating not just your basic salary but any bonuses and deductions, including tax and National Insurance. It may seem daunting at first, but becoming aware of how the system works can help you to plan your finances effectively.

FAQs

Do all bonuses get taxed?

Yes, all bonuses are considered taxable income. However, the rate at which they are taxed depends on your total yearly income.

Can I avoid paying tax on my bonus?

No, you can't avoid paying tax on your bonus. It’s a legal requirement, and attempting to avoid or evade it could lead to penalties.

What happens if I don't declare my bonus on my tax return?

Failure to declare your bonus on your tax return is considered tax evasion, which is illegal and could result in fines or prosecution.

Wrapping Up

Receiving a bonus can induce a cocktail of emotions, from excitement to confusion over how much will actually land in your account after tax. While tax laws can seem complex, breaking them down into understandable pieces helps you grasp how much of your bonus you'll actually receive. Employing tools like the bonus tax calculator and understanding National Insurance contributions ensures that you're not hit with any surprises come tax time.

In the end, even after the tax and National Insurance deductions, the bonus is still a bonus. It's extra money you've earned through your hard work and dedication. So, understand the deductions, calculate your possible take-home amount, and then enjoy your well-deserved reward!

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%.

What Happens If Your Bonus Pushes You Over £100,000 in England?

Crossing the £100,000 income line? Your bonus could come at a bigger tax cost than you expect. In the UK, once your income exceeds £100,000, you start losing your personal allowance—making this threshold a hidden tax trap. If your bonus pushes you above this line, your effective tax rate on part of that income could soar to 60%. In this article, we unpack how bonuses are taxed at higher income levels, what happens to your tax-free allowance, and whether deferring your bonus might be a smart move. Get clarity with practical advice, examples, and links to bonus and net pay calculators designed for England.