February 18, 2026

Bonus Day for Henry

by David Pegler

in Case Studies Financial Planning Insights Lifestyle

When a £33,000 bonus is not really £33,000

We introduced Henry (High Earner, Not Rich Yet) in a previous Insight.

Henry is 32. A newly-qualified actuary. Ten years of exams, evenings, weekends and missed social events. It was not easy.

He works in the City of London for a leading insurance company.

Henry is married to Joanna. They met when both were working in London – he in actuarial, she as a legal secretary. They still both commute into the City.

They own a three-bedroom executive home in Horsham. It is smart, modern, and heavily mortgaged.

They are talking about starting a family in the next few years.

For now, it is just the two of them.

And life is good.

The Commute

Henry’s typical weekday routine looks like this:

• Awake at 5:45am
• Out of the house by 6:20am
• 30-minute drive to Three Bridges
• 40-minute train to London Bridge (coffee and 07:10 train)
• 20-minute walk into the City (helps Henry’s step-count for the day)

Three hours door-to-door on a good day.

It is long.

But Henry loves the buzz of London.
The energy. The career trajectory. The upside.

It is a good life. Busy. Ambitious. Expensive.

And Today Is Bonus Day

Henry’s base salary: £90,000
Bonus awarded this year: £33,000

His employer gives him a choice:

• Take the bonus in cash
• Contribute some or all of it into his pension

Historically, Henry has always taken the cash.

It feels like a reward.
A release.
A justification for the commute and the pressure.

Maybe it is:

• A long weekend in Europe with Joanna
• Upgrading the kitchen appliances
• Booking that ski trip
• Or perhaps a shiny new road bike

All perfectly understandable. All good things.

The problem is not the spending.

The problem is when bonus day becomes: Earn it. Spend it. Repeat.

Without a plan.

But this year is different.

The Hidden 60% Tax Trap

If Henry takes the full £33,000 as cash, his income rises to £123,000.

That pushes him straight into the personal allowance taper zone.

Between £100,000 and £125,140, you effectively pay 60% tax on that slice of income because you gradually lose your £12,570 personal allowance.

So what does that mean in real terms?

If Henry takes:

The first £10,000 of his bonus in cash

• Roughly 40% tax
• Around £6,000 in his pocket

But the remaining £23,000?

If taken as salary, much of it falls into the 60% effective tax band.

So Henry faces a choice:

Take approximately £9,200 extra after tax,
OR
See roughly £23,000 go into his pension, invested for the future.

Same gross bonus. Two very different outcomes.

The Reframe

The real question is not:

“Do you want £23,000 in your pension instead of £9,200 in cash?”

The better question is:

“Would you rather have £9,200 to spend now… or £23,000 working quietly for your future self?”

Yes, pension money is locked until minimum access age (currently 55+, rising).

But paying 60% tax for short-term flexibility is expensive.

Especially at 32.

Because at 32, £23,000 invested for 20–25 years looks very different to £23,000 invested at 50.

This is one of the clearest examples of:

Pay yourself first.

Or in this case:

Pay your pension first.

The Bigger Picture

Right now, Henry and Joanna:

• Enjoy dual incomes
• Travel when they can
• Are upgrading the house gradually
• Are talking about “one day” starting a family

But when children arrive, income flexibility changes.
When one salary pauses, pressure increases.
When lifestyle expands, it rarely contracts.

This bonus decision is not about this year.

It is about the life they are building.

The Pattern

Many professionals like Henry:

• Work incredibly hard
• Earn very well
• But let tax quietly erode their upside

Without structure, bonus day becomes emotional.

With planning, it becomes strategic.

Final Thought

Henry is fictional.

But bonus day happens in thousands of households every year.

If you earn around £100,000 and receive bonuses, pause before defaulting to cash.

Sometimes the most powerful financial decision you make all year happens in a single payroll instruction.

Coming Next in “The Life of Henry”

Next time:

• What happens when Henry and Joanna start a family?
• What if one income pauses?
• What does promotion really change?
• And what happens when lifestyle inflation quietly accelerates?

Henry is only 32.

There is a lot more story to tell.