Bonus Season: Bigger Payouts, Harder Work

Bonus Season: How Does Yours Measure Up?

FT readers anticipate higher payouts this bonus season, but many feel they have to work harder for their bonuses as tax increases bite and performance metrics alter. Over half of the 1,000 respondents expect a bigger or substantially bigger payout than last year, with banking and investment banking professionals reporting the most significant increases. High flyers in the legal profession and asset management sector also reported substantial increases, while energy and management consultancy sectors saw the highest numbers of respondents reporting bonuses worth substantially less than last year.

One in ten respondents said the metrics used to measure their performance had changed this year, with many in banking complaining about "fixed pay inertia" – while their bonus had risen, overall compensation packages were fairly flat. Readers expressed uncertainty about pay and performance in the year ahead, with some predicting a blockbuster year of M&A and others warning of a global trade war and tax changes in the UK Budget that could crush any prospect of a bumper payout next year.

Most readers who completed the survey expected fatter payouts than last year, with 15 per cent in line for a bonus of between £250,000 and £2mn, compared with 10 per cent in the 2024 poll. One in five respondents said they expected a bonus of between £100,000 and £250,000, up from one in eight last year. However, many readers said that while bonuses had increased, so had the use of deferral mechanisms.

Despite the anticipated increases, a mood of caution prevailed in readers' detailed comments as bonus payouts struggled to keep pace with increased living costs, including VAT on school fees and higher mortgage rates. Fourteen per cent of readers said they intended to spend most of their bonus, and 17 per cent intended to use their bonus to pay down debt, assuming they were still in line to receive a payout.

One reader in financial services said he was setting aside his entire £50,000 bonus to address the "spiteful imposition" of VAT on school fees, predicting this would hit UK economic activity. Another reader in the oil and gas sector said they needed to earn significantly more than last year to cover VAT on school fees and mortgage costs, which were all rising.

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