Answers · UK 2025/26
Why was my bonus taxed so much and will I get it back?
A bonus is taxed through PAYE as if you earn that amount every month, so payroll applies your highest marginal rates to it and may push you temporarily into a higher band. Often too much tax and National Insurance is deducted, but Income Tax usually corrects itself automatically over the rest of the tax year.
Full answer
When a bonus is paid through payroll, PAYE treats it as part of that single pay period and annualises it -- the system assumes you will receive the same amount every month. This inflates your estimated annual income, so more of the bonus is taxed at higher marginal rates and your tax-free Personal Allowance (GBP 12,570 for 2026/27) may appear to be used up faster, which is why the deduction looks unexpectedly large. The bands that apply are basic rate 20% up to GBP 50,270, higher rate 40% from GBP 50,271 to GBP 125,140, and additional rate 45% above that. Watch the 60% effective trap: between GBP 100,000 and GBP 125,140 the Personal Allowance is withdrawn at GBP 1 for every GBP 2 of income, so a bonus that pushes you into this band is taxed at an effective 60%. Employee National Insurance is 8% on earnings between GBP 12,570 and GBP 50,270 and 2% above GBP 50,270; because NI is calculated per pay period and is not reconciled annually like Income Tax, a large one-off bonus can attract more 2% (above the threshold) NI than if it were spread out, and that NI element is generally not refundable. Will you get Income Tax back? Usually yes -- PAYE is cumulative, so in the months after the bonus your tax code spreads your allowances and bands across the year and the over-deduction is repaid through reduced tax in later payslips, leaving you correct by the tax year end. If your code is wrong (for example, an emergency code on a W1/M1 basis), it may not self-correct, and you would reclaim via HMRC after the year ends or by getting your code amended. Worked check: a GBP 5,000 bonus on top of a GBP 48,000 salary partly straddles the 40% band, so expect a chunk taxed at 40% plus 2% NI. Use a take-home pay or income tax calculator with your salary plus bonus to see the true annual position.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.