Bonuses and Your IVA, Question by Question
Why a bonus is treated differently, and exactly what you keep.
What happens if I get a bonus at work?
A bonus is treated as extra income, not a windfall. That distinction matters: unlike an inheritance or a win, you do not pay the whole thing in. Instead, a special rule lets you keep a buffer of your extra earnings, with only part of the rest going into your IVA. The same approach applies to overtime and commission. You do, however, still need to declare it.
Isn't a bonus a windfall?
No, and that works in your favour. Windfalls like inheritances and lottery wins are normally paid in full into the IVA. A bonus, by contrast, is additional income from your job, and is handled under a separate, more generous rule. So while you must report a bonus, you get to keep more of it than you would a true windfall. The two are treated quite differently.
How much of my bonus do I keep?
You keep everything up to 10% of your normal take-home pay, then half of the rest. The standard rule lets you earn up to 10% above your usual monthly net pay before anything is due. For earnings above that 10% buffer, you keep half and pay the other half into your IVA. So even on a large bonus, a good portion stays with you.
Can you show an example?
Certainly. Say your normal take-home pay is £2,000 a month. Your 10% buffer means you can receive up to £2,200 with nothing due. If a bonus takes you to £2,500 in a month, that is £300 above the buffer, so you pay in half, £150, and keep the other £150, on top of the £200 buffer. The maths is designed to leave you genuinely better off for the extra work.
Do I have to declare a bonus?
Yes, where it takes you over the 10% buffer. You must tell your supervisor about additional income, including bonuses, that exceeds 10% of your normal take-home pay, usually within 14 days of receiving it, and pay over the 50% share within 14 days of disclosing. Declaring it is part of your IVA obligations, and failing to do so is treated as a breach, so keep your supervisor informed.
Does this cover overtime and commission too?
Yes. The same 10% buffer and 50% split applies to overtime, commission and similar extra earnings, not just formal bonuses. The idea is consistent: you are rewarded for earning more, keeping all of a modest increase and half of anything beyond that, while your creditors share in the rest. If your pay regularly varies, your supervisor can explain how it is assessed.
What if I don't declare it?
That is a breach of your IVA. Not disclosing additional income, or not paying the share that is due, breaks the terms of your arrangement and can put it at risk of failing. Supervisors review your finances, including at your annual review, so undeclared bonuses can come to light. It is always better to declare promptly and keep your half than to risk the whole arrangement by staying quiet.
Should I get advice?
If your pay is complex, yes. If you receive irregular bonuses, heavy overtime or variable commission, a free, impartial adviser can help you understand exactly what you must declare and what you keep. They can also make sure your normal pay figure is set fairly. It costs nothing, and getting clear on the rules means you can take on extra work confident you will benefit from it.
