Many people will have a set salary at work, which is then added to with performance bonuses at set times of the year, and depending on how these are paid will have an impact on your tax position.
If your employer includes it on your payslip with the rest of your pay, you’ll pay tax and National Insurance Contributions on this just as you do on your salary. So don’t start banking on a bumper bonus being tax-free.
Ask your employer if you want to know anything about the way bonuses are being dealt with. If you’re still not clear, your employer will be able to give you contact details for your Tax Office. Alternatively, go to www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax for more information.
