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
How it's calculated
The 60% tax trap is not a separate tax — it is a side-effect of how the personal allowance is withdrawn. Everyone normally gets a tax-free personal allowance of £12,570. Once your adjusted net income passes £100,000, HMRC removes that allowance at a rate of £1 for every £2 you earn above the threshold. Because £12,570 of allowance is fully cancelled over a £25,140 income band, the allowance has completely vanished by £125,140. The sting is what that withdrawal does to your marginal rate. Within the £100,000–£125,140 band you already pay 40% higher-rate tax on each extra pound. On top of that, every £2 you earn drags £1 of previously tax-free allowance into the 40% band, adding 20p of tax per £1 earned. Forty pence plus twenty pence is 60p of income tax on each extra pound — a 60% effective rate. Add 2% employee National Insurance (the rate above the upper earnings limit) and the true marginal rate is 62%. Adjusted net income is the figure that matters, and crucially it is reduced by gross personal or salary-sacrifice pension contributions and Gift Aid. That is why paying enough into a pension to bring adjusted net income back down to £100,000 fully restores the allowance and removes the trap.
Personal allowance lost = min(£12,570, (Adjusted net income − £100,000) ÷ 2)
Remaining allowance = £12,570 − allowance lost
Marginal income tax in band = 40% + (loss of allowance effect)
= 40p + (½ × 40p) = 60p per £1
Marginal rate with NI = 60% + 2% = 62%
Adjusted net income = Gross pay − gross pension contributions − Gift AidWorked example
Take the calculator's default: a £110,000 gross salary in 2026/27 (England), standard tax code, with no pension contribution.
| Gross salary / adjusted net income | £110,000.00 |
| Income over £100,000£110,000 − £100,000 | £10,000.00 |
| Personal allowance lost£10,000 ÷ 2 | −£5,000.00 |
| Personal allowance remaining£12,570 − £5,000 | £7,570.00 |
| Taxable income£110,000 − £7,570 | £102,430.00 |
| Income Tax @ 20% (basic band)20% × £37,700 | −£7,540.00 |
| Income Tax @ 40% (higher band)40% × £64,730 | −£25,892.00 |
| Income Tax total | −£33,432.00 |
| National Insurance @ 8%8% × (£50,270 − £12,570) | −£3,016.00 |
| National Insurance @ 2%2% × (£110,000 − £50,270) | −£1,194.60 |
| Net take-home (annual) | £72,357.40 |
On the next £1 earned this worker keeps just 38p: 40p goes to higher-rate tax, 20p to the lost allowance and 2p to National Insurance — a 62% marginal rate. Redirecting £10,000 into a salary-sacrifice pension cuts adjusted net income to £100,000 and restores the full £12,570 allowance; because 62% of that money would otherwise have gone in tax and NI, the real out-of-pocket cost of the £10,000 pension is only about £3,800.
When your result may differ
Your figure can move for several reasons. Scotland sets its own income-tax bands (rates of 19% to 48%), so the allowance taper there stacks on a 45% or 48% marginal rate, pushing the effective trap rate above 67% — this calculator uses England, Wales and Northern Ireland rates. Adjusted net income, not gross salary, is what triggers the taper: existing pension contributions, Gift Aid donations and certain trading losses lower it, so two people on the same headline salary can have very different exposure. A bonus counts in full, so a salary just below £100,000 can be tipped into the trap by a one-off payment. The tapered annual allowance may limit how much you can pay into a pension once 'threshold income' exceeds £200,000, so very high earners cannot always contribute their way out. Finally, employer National Insurance and benefits in kind (a company car, private medical cover) feed into different figures and are not modelled here.
Rates and thresholds
England, Wales and Northern Ireland — 2026/27 tax year. The trap sits in the highlighted band.
| Adjusted net income | Income Tax band | Personal allowance | Marginal rate (with 2% NI) |
|---|---|---|---|
| £12,571 – £50,270 | Basic (20%) | Full £12,570 | 28% |
| £50,271 – £100,000 | Higher (40%) | Full £12,570 | 42% |
| £100,001 – £125,140 | Higher (40%) + allowance taper | Tapering to £0 | 62% (the trap) |
| £125,141 + | Additional (45%) | £0 | 47% |
Sources & legal basis
| Source | What it covers | Last checked |
|---|---|---|
| HMRC — Income Tax: income over £100,000 | Personal allowance taper threshold, £1-for-£2 withdrawal and the £125,140 cut-off | |
| HMRC — Income Tax rates and Personal Allowances | Personal allowance, basic, higher and additional rate bands | |
| HMRC — National Insurance rates and categories | Class 1 employee 8% and 2% rates and thresholds | |
| HMRC — Personal allowances: adjusted net income | Definition of adjusted net income and deductible pension/Gift Aid contributions |
Update log
- — Updated to the 2026/27 tax year; personal allowance frozen at £12,570 and taper still running from £100,000 to £125,140.
- — Added how-it-works explainer, worked example, rates table and source table; re-derived the £110,000 worked example against the calculator parameters.
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.