1. What is UK Bonus Tax?

In the UK, bonuses are treated as income and are subject to income tax and National Insurance contributions. The tax rate depends on your income tax bracket.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Bonus \) — The gross bonus amount in GBP
• \( Bracket\ Rate \) — Your applicable income tax rate (as decimal)

Explanation: Your bonus is taxed at your marginal rate of income tax. The calculator multiplies your bonus by your tax rate to estimate the tax due.

3. Importance of Bonus Tax Calculation

Details: Understanding how much tax you'll pay on a bonus helps with financial planning and ensures you're not surprised by a smaller net payment than expected.

4. Using the Calculator

Tips: Enter your gross bonus amount in GBP and your applicable tax rate as a decimal (e.g., 0.20 for 20%). The calculator will show the estimated tax due on your bonus.

5. Frequently Asked Questions (FAQ)

Q1: What are the current UK tax brackets?
A: As of 2023: Basic rate (20%) up to £50,270, Higher rate (40%) up to £150,000, Additional rate (45%) above £150,000.

Q2: Is National Insurance also deducted from bonuses?
A: Yes, bonuses are subject to both income tax and National Insurance contributions.

Q3: How do I know my correct tax bracket?
A: Your bracket depends on your total annual income (salary + bonus + other income).

Q4: Are there any tax-free bonuses?
A: Some small, non-cash benefits may be tax-free, but cash bonuses are generally taxable.

Q5: When is bonus tax deducted?
A: Typically through PAYE when the bonus is paid, similar to regular salary deductions.