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60% Tax Trap Calculator 2026

The UK personal allowance tapers away by £1 for every £2 earned over £100,000. Between £100,000 and £125,140, you face an effective 60% tax rate (62% with NI). This calculator shows your marginal rate and how much pension contribution would escape it.

Are you in the 60% tax trap?

  • 60% tax trap statusYes — your marginal rate is approximately 62% in this band
  • Net annual take-home£72,357.40
  • Marginal tax rate (next £1)62.0%
  • Effective tax rate34.22%
  • Adjusted net income (after pension)£110,000.00
  • Personal allowance available£7,570.00
  • Personal allowance lost to taper£5,000.00
  • Income tax annual£33,432.00
  • National Insurance annual£4,210.60
  • Pension contribution to fully escape trap£10,000.00

What is the UK 60% tax trap and how to escape it?

When your adjusted net income exceeds £100,000, your £12,570 personal allowance starts to reduce by £1 for every £2 over the threshold. By £125,140, the entire allowance is gone. The effect: every £100 you earn between £100,000 and £125,140 incurs £40 in income tax (40% higher rate) plus an additional £20 in tax because you've lost £50 of personal allowance worth £20 in higher-rate tax (50 × 40%) — that's £60 effective income tax, plus £2 of NI = £62 total. So a £1,000 bonus in this band typically nets only £380 after tax. The standard mitigation is a pension contribution: if your gross salary is £110,000, contributing £10,000 to a pension via salary sacrifice brings your adjusted net income back to £100,000, restoring your full personal allowance. Net cost of that £10,000 pension is only £3,800 — you've turned £1,000 of bonus into £6,200 of pension. As an example, with £110,000 salary and no pension: net take-home about £73,300; in trap, marginal rate 62%. With £10,000 pension contribution: net take-home about £69,500 (out-of-pocket cost only £3,800), but you've added £10,000 to retirement and escaped the trap entirely for future raises. The key UK pension providers for personal contributions are Aviva, Hargreaves Lansdown and AJ Bell.

Official source: gov.uk · Data updated: 2026-04-09

Frequently asked questions

Why is it called the '60% tax trap'?

Because between £100k and £125,140, every additional £1 of income costs you 40p in income tax + 20p worth of lost personal allowance × 40% = 60p in effective tax. Adding 2% NI takes it to 62%. It's a well-known cliff in the UK tax system that catches high earners off guard.

What is 'adjusted net income'?

Your gross salary minus certain deductions, including pension contributions, gift aid donations, and trading losses. The £100k threshold for personal allowance taper applies to adjusted net income, so increasing pension contributions can reduce this figure and restore the personal allowance.

What's the most efficient way to escape the 60% trap?

Increase pension contributions until your adjusted net income drops to or below £100,000. The pension contribution gives you 60% effective tax relief in this band — extraordinary value. Even better via salary sacrifice (also saves NI). Other options: gift aid donations, exercise of lower-paid alternatives like sabbaticals.

Should I always escape the trap with pension?

Almost always yes if you can afford it, but consider: pension money is locked until age 55 (rising to 57 in 2028). If you need accessibility, alternatives are EIS investments (30% income tax relief, but more risky) or VCTs. Standard pension is the simplest and most efficient for most.

Are there other tax cliffs in the UK system?

Yes. The 'child benefit cliff' starts at £60k+, eroding child benefit by 1% per £200. The 'tapered annual pension allowance' kicks in at £260k+. The £125,140 threshold also triggers the 45% additional rate. The trap zone (60-62%) is the steepest in the UK tax system.

Does the trap apply to bonuses too?

Yes. If your salary is £95k and you receive a £20k bonus, the bonus pushes you into the trap zone. The taxman doesn't distinguish between salary and bonus for adjusted net income. Many high earners route bonus into pension to avoid this.

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