1. Separate the deductions before calculating a percentage
Put your ordinary payslip beside the bonus payslip. Record gross pay, taxable pay, Income Tax, employee NI, student loan, postgraduate loan, pension and other deductions. Compare like with like: a bank payment is after every deduction, while an advertised bonus is usually a gross amount.
If your usual net pay is £3,000 and the bonus-month net pay is £5,900, the extra cash is £2,900. For a £5,000 bonus that is 58% kept. The missing 42% is a starting point for investigation, not proof of a 42% income-tax rate. Check whether your ordinary pay also changed, whether a pension percentage applies to bonuses and whether the month contains expenses or an unrelated deduction.
Keep the tax line distinct from the NI line. For ordinary employees, NI normally uses the pay period rather than the annual income-tax calculation. Directors have separate annual NI arrangements. An annual calculator's NI difference may therefore differ from the actual NI charged on one irregular payment. HMRC employer thresholds
2. Read the tax basis, not just the headline salary
Under a normal cumulative basis, payroll takes account of pay and tax earlier in the tax year. An emergency code ending W1, M1, X or NONCUM instead treats the current week or month on its own. It effectively treats that period's pay as recurring. A bonus early in the tax year, missing previous-employment figures or a temporary code can therefore produce a result that looks different from a simple annual estimate. HMRC: emergency codes
Do not assume every bonus is taxed as though it repeats for twelve months. Check the actual code and basis. Likewise, do not assume that all of a large deduction will come back. Some of it may be exactly the tax due once the extra income is included.
If HMRC changes your code after a bonus, compare the expected annual income shown in your tax account with your own realistic forecast. Use salary already paid plus salary still expected plus known bonuses and taxable benefits. An isolated high month should not silently become your personal budgeting assumption for the entire year.
3. Calculate the annual income-tax difference
For 2026/27 the standard Personal Allowance is £12,570. In England, Wales and Northern Ireland, the basic rate is 20% and the higher rate is 40%; the standard higher-rate threshold is £50,270. Income above £100,000 can reduce the allowance. Current rates and allowance
The useful comparison is annual tax on income including the bonus minus annual tax without it. That isolates the bonus's income-tax effect. It does not reproduce PAYE timing, and it excludes NI and loans unless separately added.
Example 1: a £5,000 bonus crosses the higher-rate threshold
Worked example
Assume £48,000 salary, a £5,000 cash bonus, standard allowance, no pension deductions, benefits or other income, and England/Wales/Northern Ireland for all of 2026/27.
- £50,270 minus £48,000 leaves £2,270 in the basic-rate band.
- £2,270 × 20% = £454.
- The remaining £2,730 × 40% = £1,092.
- Annual Income Tax attributable to the bonus: £1,546.
- Bonus left after Income Tax alone: £3,454.
That is a 30.92% income-tax effect on the bonus. The calculation does not apply 40% to the whole £5,000, and it is not the final cash received after NI, loans or pension.
Example 2: a £5,000 bonus enters the allowance taper
Worked example
Assume £98,000 salary and the same exclusions, region and tax year. Adding £5,000 produces £103,000 adjusted net income. The £3,000 above £100,000 removes £1,500 of Personal Allowance under the £1-for-£2 taper.
The £5,000 itself creates £2,000 of tax at 40%. The £1,500 allowance reduction creates another £600. The annual Income Tax increase is £2,600, leaving £2,400 before NI and other deductions. The existing 60% tax-trap guide explains that mechanism in more depth.
Neither example guarantees a refund. They tell you whether the annual tax difference itself could explain much of the deduction.
4. Decide who needs which information
Ask payroll to explain the taxable-pay amount, tax code, cumulative or noncumulative basis, previous pay/tax figures and the loan plan used. Give payroll documents rather than requesting an arbitrary code. If the underlying income estimate or employment information HMRC holds is wrong, correct it through HMRC's tax service.
If HMRC has all the necessary figures and issues a corrected code, an overpayment can be refunded through pay. Monthly employers normally use a new code on the next or following pay. Missing records can delay a refund. HMRC: too much or too little tax
Track the following payslip rather than treating the code notice itself as a completed refund. Keep the notice, your comparison and payroll's explanation together.
5. Make the next bonus easier to plan
Before the next award, ask how bonus pension treatment works and when elections close. Use the bonus calculator for an annual salary-with-and-without-bonus comparison and the pension calculator for contribution scenarios. These are planning tools, not a cumulative PAYE simulator.
Where childcare eligibility or Child Benefit matters, calculate adjusted net income as a separate step. Where a loan deduction is the surprise, read student loan bonus refunds. A pension choice also affects accessible cash: money moved into a pension is not available for next month's bills.
Common questions
Does the UK have a flat 40% bonus tax?
No. A cash bonus joins employment earnings. Your bands, allowance, region and circumstances determine the income-tax result.
Will the next payslip refund everything?
Only an actual overpayment is refundable. The timing depends on the code, complete income information and payroll processing. Higher annual tax caused by the bonus remains due.
Can this explain my exact payslip?
It provides a checking method. Exact payroll needs pay dates, year-to-date amounts, code basis, NI category, pension rules and loan details. Scottish figures and director NI require their own treatment.
Sources
Primary references checked 24 October 2026.