Last updated: 14 October 2026
How will a bonus affect your tax on a £95,000 income?
On a £95,000 salary you’re already a higher rate taxpayer, so a bonus is taxed at 40% plus 2% employee NIC. The problem starts if the bonus takes your adjusted net income over £100,000. Above that, you lose £1 of your £12,570 Personal Allowance for every £2 of income, creating an effective tax rate of 60% (62% with NIC) on income between £100,000 and £125,140. You may also lose 30 hours of free childcare and Tax-Free Childcare if either parent’s income goes over £100,000.
2026/27 rates on income from £95,000 upwards
| Income band | Tax rate | Effective rate with NIC |
| £50,271 to £100,000 | 40% | 42% |
| £100,001 to £125,140 | 40% plus allowance taper | 62% |
| Over £125,140 | 45% | 47% |
Example: a £10,000 bonus
| Item | Without bonus | With £10,000 bonus |
| Salary and bonus | £95,000 | £105,000 |
| Personal Allowance | £12,570 | £10,070 |
| Income tax | £25,432 | £30,432 |
| Extra tax on bonus | £5,000 (50%) | |
| Extra NIC (2%) | £200 |
The £10,000 bonus costs £5,200 in tax and NIC, leaving £4,800. The first £5,000 of the bonus is taxed at 42%, the next £5,000 at 62%.
How to keep income under £100,000
- Salary sacrifice into a pension: sacrificing £5,000 of the bonus brings income to £100,000, saving the 62% rate and employer NIC too
- Personal pension contributions: a £4,000 net contribution (£5,000 gross) extends your basic rate band and reduces adjusted net income
- Gift Aid donations: grossed-up donations reduce adjusted net income
- Cycle to work or electric car schemes: salary sacrifice reduces taxable pay
Salary sacrifice limits from April 2029
From April 2029, NIC relief on pension salary sacrifice is expected to be capped at £2,000 a year. Income tax relief will continue, so sacrifice will still help avoid the £100,000 taper.
Childcare
If you have children under 12, crossing £100,000 loses Tax-Free Childcare (worth up to £2,000 a child) and, for under-5s in England, the 30 hours of funded childcare. One pound over the limit can cost thousands, so check projected income before the bonus is paid.
Child Benefit
At £95,000 you’re already above the £80,000 level where the High Income Child Benefit Charge takes back all of the benefit.
Common mistakes
- Assuming the bonus is taxed at 40% throughout
- Forgetting to tell HMRC about personal pension contributions for higher rate relief
- Missing the childcare cliff edge
- Leaving salary sacrifice until after the bonus is paid
Timing the bonus
If your employer lets you choose, taking part of the bonus after 5 April spreads it across two tax years. That only helps if your income in the later year is lower, so compare both years before deciding.
Higher rate relief on personal contributions
If you pay into a personal pension, the provider claims 20% basic rate relief. You must claim the extra relief on your tax return or by contacting HMRC, otherwise you lose the higher rate saving and your adjusted net income isn’t reduced for the taper.
Frequently asked questions
Does a bonus push all my income into a higher band?
No, only the part over each threshold.
Will I get emergency tax on the bonus?
PAYE may over-deduct in that month but it evens out.
Can I claim pension relief later?
Yes, through Self Assessment up to 4 years back.
Does dividend income count?
Yes, adjusted net income includes it.
Related: higher rate pension relief, tax-exempt bicycle scheme and childcare tax relief.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with higher rate tax planning. See our tax refund accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
