Bonus & Variable Pay Impact Calculator
How a bonus, commission or overtime changes your student loan deduction, your tax and your National Insurance — in the payslip it lands in, and across the whole 2026-27 tax year.
If a bonus leaves you with spare cash, read should I overpay my student loan before deciding whether to put it toward the balance.
Why bonus deductions spike
Student loan repayments are worked out on each pay period's income on its own. A bonus pushes that period well above the threshold, so the deduction jumps for that payslip only.
£2,916.67 per month before the bonus.
The tax year starts on 6 April, so tax month 1 is April. Under cumulative PAYE an early bonus is taxed against a smaller slice of your bands, so more tax comes off then and unwinds later in the year. Your student loan deduction is the same whichever period it lands in.
England 2012–2023; Wales from 2012
England, Wales and Northern Ireland rates: 20%, 40%, 45%.
Your tax code changes the tax, never the student loan. Student loan deductions are set by a separate SL1 or PGL1 notice[source].
Thresholds used (2026-27)
Plan 2: £2,448 a month at 9%
Annual equivalent: £29,385
HMRC publishes and floors these per-period figures; they are not the annual threshold divided by 12[source].
Outcome: repaid in full
Correct, not an overpayment
£450 of your £5,000 bonus goes to your student loan, and £3,374 reaches your bank account once tax and National Insurance are taken too.
Your income for the year is £40,000, which carries a student loan liability of £955. Nothing here is refundable.
Your £5,000 bonus, 2026-27
Net bonus
£3,374
67.5% of the gross, over the tax year
To your student loan
£450
2026-27 thresholds
Income tax on the bonus
£1,000
England, Wales and NI rates
National Insurance
£176
Per pay period, 8% then 2%
How this is worked out
(£7,916.67 − £2,448) × 9% = £492
Plan 2 in December (tax month 9): HMRC's monthly threshold of £2,448 for 2026-27, deduction rounded down to a whole pound the way payroll does. Without the bonus that period would have been £42.
How this is worked out
£5,000 − £1,000 − £176 − £450 = £3,374
Gross bonus less income tax, National Insurance and student loan across the whole 2026-27 tax year.
The payslip itself: normal month vs December (tax month 9)
Normal month
- Gross pay
- £2,916.67
- Income tax
- −£373.83
- National Insurance
- −£149.49
- Student loan
- −£42
- Net pay
- £2,351.34
December (tax month 9)
- Gross pay
- £7,916.67
- Income tax
- −£1,373.83
- National Insurance
- −£325.83
- Student loan
- −£492
- Net pay
- £5,725.00
What the bonus costs: that payslip vs the whole year
PAYE is cumulative, so an early bonus over-deducts income tax and gives it back over the following periods. The year column is the real cost; the payslip column is what you will actually see on the day.
| Deduction | In December (tax month 9) | Across the tax year |
|---|---|---|
| Income tax | £1,000.00 | £1,000.00 |
| National Insurance | £176.34 | £176.34 |
| Student loan | £450 | £450 |
| Net bonus | £3,374 | £3,374 |
| Effective deduction rate | 32.5% | 32.5% |
Student loan deductions across 2026-27
Without the bonus
£504
With the bonus
£954
Liability on £40,000
£955
PAYE collects each period's deduction rounded down to a whole pound, so the year's total lands a few pounds either side of the annual liability. A gap of a few pounds is rounding, not an error; a gap of hundreds usually means income the year did not actually carry, and is worth a refund claim.
Rates, assumptions and sources
Every figure below is the 2026-27 published figure, read from this site's single source of truth at page-render time[source]. The 6% Plan 2 and Postgraduate interest cap covers the 2026/27 year only and is not assumed to continue[source].
| Plan | Threshold | Rate | Interest | Written off | Threshold freeze |
|---|---|---|---|---|---|
| Plan 2 | £29,385[source] | 9% | 4.1% to 7.1% by income, capped at 6% for 2026-27[source] | 30 years[source] | Frozen at £29,385 until April 2030 |
Write-off is counted from the April after the course ends, not from the course-end date itself, and the Plan 2 interest bands (£29,385 lower, £52,885 upper) are frozen alongside the Plan 2 repayment threshold.
This calculator also assumes
- Tax year
- 2026-27
- Pay frequency
- monthly (12 periods a year)
- Income tax basis
- Cumulative PAYE, tax month 1 = April
- Tax code
- 1257L
- Income tax rates
- England, Wales and Northern Ireland
- National Insurance
- Employee Class 1, worked out per pay period
- Loan deduction rounding
- Rounded down to a whole pound each period
- Not modelled
- Pension salary sacrifice, benefits in kind, K codes
Growth, inflation and long-run interest figures are assumptions, not published rates. Change them and the projection changes.
Understanding student loan deductions on bonuses
How it works
- • Your student loan is worked out on each pay period on its own
- • A bonus pushes that period's income above the threshold
- • 9% of the excess is deducted, rounded down to a whole pound
- • The spike is temporary and lasts one payslip
- • The year's total is still close to your annual liability
When a refund really is due
- • Your income for the whole tax year came in below the annual threshold
- • But one bonus period on its own went above the period threshold
- • Then PAYE deducted money the year never owed
- • Ask the Student Loans Company, not your employer, for the refund
- • There is no time limit, but claim promptly
Your figures
On £35,000 a year with a Plan 2 loan, your normal monthly student loan deduction is £42. In December (tax month 9), with a £5,000 bonus on top, it is £492 — an extra £450 for that payslip.
That happens because your income for that period (£7,916.67) is well above the monthly threshold of £2,448 for 2026-27.
Related tools
- • Just want to check one bonus-month payslip against what payroll took? Use the bonus month PAYE calculator.
- • Paying a bonus into a pension instead? Pension salary sacrifice calculator.
- • For your ordinary monthly deduction, the monthly repayment calculator.
Think a bonus month overcharged you?
Student loan refunds are handled by the Student Loans Company, not your employer and not HMRC. Check your annual income against the annual threshold first.
Related student loan calculators
The bonus and variable pay calculator answers one specific question. For the full picture, start with our UK student loan calculator on the homepage, work out what leaves your payslip each month with the monthly repayment calculator, or check what you can borrow with the student finance calculator. Every tool on the site is listed in the UK student loan calculator directory.
- bonus month PAYE calculator: tax, National Insurance and student loan on a bonus payment
- pension salary sacrifice calculator: how sacrificing salary into a pension lowers your deduction
- monthly repayment calculator: the monthly deduction taken from your payslip on any plan