Example
Comparing two job offers with different bonus structures
A worked example showing how two offers can look close on paper while landing differently in after-tax cash and certainty.
Scenario
Two job offers arrive at the same time. Offer A pays a stronger base with a modest bonus. Offer B pays less base but advertises a higher bonus target. On total package the numbers look compelling for Offer B — but the after-tax result is closer than expected, and the certainty picture is very different.
- Offer A: £60,000 base + 10% bonus target = £6,000 potential bonus
- Offer B: £55,000 base + 20% bonus target = £11,000 potential bonus
Step 1: Base salary take-home
Using 2025-26 rates:
| | Offer A (£60k base) | Offer B (£55k base) | |---|---|---| | Income tax | £11,432 | £9,432 | | Employee NI | £3,211 | £3,111 | | Base take-home | £45,357/year | £42,457/year | | Monthly base take-home | £3,780/month | £3,538/month |
The base gap is £2,900/year (£242/month) in favour of Offer A.
Step 2: After-tax bonus
Bonuses are taxed as marginal income in the pay period they are received. The key question is what tax rate applies.
Offer A bonus (£6,000 at £60k base): At a £60,000 base, the entire £6,000 bonus falls in the higher-rate band (above £50,270). - Net bonus: £6,000 × (1 − 0.40 − 0.02) = £6,000 × 58% = £3,480
Offer B bonus (£11,000 at £55k base): At a £55,000 base, the remaining higher-rate headroom before the bonus is: £50,270 − £55,000 = already in higher rate. Wait — at £55k base, the employee is already above £50,270, so the full bonus hits at higher rate too. However, the first £270 of taxable space above personal allowance within the basic-rate band has been used, so the split is: - First £270 of bonus: basic rate (20% tax + 8% NI = 28% deductions) → net: £270 × 72% = £194 - Remaining £10,730: higher rate (40% tax + 2% NI = 42% deductions) → net: £10,730 × 58% = £6,223 - Net bonus: £194 + £6,223 = £6,417
Step 3: Total take-home comparison (full bonus)
| | Offer A | Offer B | |---|---|---| | Base take-home | £45,357 | £42,457 | | After-tax bonus | £3,480 | £6,417 | | Total take-home | £48,837 | £48,874 | | Monthly equivalent | £4,070 | £4,073 |
At full bonus payout, these two offers are virtually identical in spendable cash — just £37/year apart.
Step 4: The risk analysis
The figures above assume Offer B pays the full £11,000 bonus. That is a significant assumption. Consider what happens if Offer B pays only 50% of target (£5,500):
Offer B at 50% bonus (£5,500): - First £270 at basic rate: £194 - Remaining £5,230 at higher rate: £5,230 × 58% = £3,033 - Net bonus: £194 + £3,033 = £3,227 - Total take-home: £42,457 + £3,227 = £45,684
| Scenario | Offer A | Offer B | |---|---|---| | Full bonus | £48,837 | £48,874 | | 50% bonus | £48,837 | £45,684 | | No bonus | £45,357 | £42,457 |
At 50% bonus, Offer B produces £3,153/year less than Offer A. At zero bonus, the gap is £2,900/year.
Verdict
The after-tax numbers show that Offer A and Offer B are equivalent only when Offer B hits 100% of its bonus target. At any shortfall, Offer A delivers more spendable income. The question to ask is: how confident are you that the Offer B bonus is genuinely achievable, and what does the company's bonus payment history look like?
Offer A is the lower-risk choice. Offer B only wins financially if the bonus pays out in full.
Practical next step
Use the salary vs bonus calculator to model different payout scenarios, and the job offer comparison calculator to compare the full packages side by side.
How to use PayPath here
Run the relevant calculator for your live numbers, review the methodology if the assumptions matter to your decision, and save the strongest scenarios in the workspace if you are comparing more than one option.