60% Tax Trap Calculator

The 60% tax trap is the £25,140-wide band between £100,000 and £125,140 where HMRC quietly withdraws your personal allowance and pushes your marginal income tax rate to 60p in the pound. Our 60% tax trap calculator shows you exactly how much of your salary is sitting inside the trap and what it would cost in take-home pay to sacrifice your way out.

Contents

• What the 60% tax trap actually is
• How to use the calculator
• Worked example: £110,000 earner
• How to escape it
• When the trap gets worse than 60%
• Frequently asked questions

What the 60% tax trap actually is

The UK personal allowance for 2026-27 is £12,570 of tax-free income. Above £100,000 of adjusted net income, HMRC takes it away. Specifically, for every £2 you earn above £100,000, you lose £1 of personal allowance, until the allowance hits zero at £125,140.

The lost allowance becomes taxable income at the 40% higher rate. So every extra £1 of salary in this band attracts 40p of tax on the pound itself, plus another 20p of tax on the 50p of allowance you just forfeited. That is 60p of income tax on a single pound. Add 2% employee National Insurance and the real marginal rate is 62p in the pound. In Scotland, where the equivalent advanced rate is 45%, the marginal rate climbs to 67.5%.

The trap was introduced in 2010 as a stealth revenue raiser. It has never been advertised, never been removed, and the thresholds have been frozen until April 2028, which means fiscal drag pulls more workers into it every year. Payroll software handles it silently. There is no line on your payslip that says "you just paid 60%". If you do not know it exists, you cannot plan around it.

How to use the calculator

The calculator is built around the existing take-home pay calculator, which handles the full band-by-band breakdown. The 60% trap page gives you four quick-pick scenarios (£105k, £115k, £125k, £135k) that load the take-home calculator with a preset gross salary, so you can see your exact position in seconds.

Inputs that matter:

• Gross annual salary: the headline number on your contract before any deductions.
• Pension contribution percentage: any sacrifice you already make reduces the salary that enters the taper calculation.

What the calculator outputs:

• The band-by-band breakdown of your income tax, showing the slice taxed at 0%, 20%, 40%, the 60% band, and 45% if you cross £125,140.
• Your effective marginal rate, which is what you actually keep from the next pound you earn.
• The "sacrifice to escape" figure, which is the gross pension contribution needed to bring your taxable income back to £100,000 and recover the full personal allowance.

If you want to test how a larger pension contribution affects the trap, use the salary sacrifice optimiser alongside it.

Worked example: £110,000 earner

A £110,000 salary sits £10,000 inside the trap. The 2026-27 tax bill looks like this:

• £0 to £12,570: tax-free personal allowance.
• £12,570 to £50,270: 20% basic rate on £37,700 = £7,540.
• £50,270 to £100,000: 40% higher rate on £49,730 = £19,892.
• £100,000 to £110,000: 40% on £10,000 = £4,000, plus 40% tax on the £5,000 of personal allowance just lost = £2,000. Effective tax on this slice: £6,000, or 60p in the pound.

Total income tax: roughly £33,432. Add employee NI of around £4,800 and the take-home is approximately £71,768.

Now sacrifice £10,000 into the workplace pension. Taxable salary drops to £100,000, the full personal allowance is restored, and the £10,000 slice that was being taxed at 60% disappears from the income tax calculation entirely. Total tax saving plus NI saving is around £6,200. The net cost to take-home pay is about £3,800, but a full £10,000 lands in the pension. Few other legitimate UK tax-planning levers deliver a comparable ratio for higher earners.

How to escape it

Salary sacrifice into a workplace pension is the heaviest lever available. Every £1 sacrificed is a £1 your taxable income never sees, so the personal allowance taper does not apply to it. Sacrificing enough to bring taxable pay down to £100,000 takes you out of the trap entirely. Whether that is the right move for you depends on your wider financial position, age, and access needs - pension money is locked up until age 57 from 2028 - so consider speaking to a regulated adviser if you are unsure. See our guide on SIPP vs workplace pension for why the workplace route is usually preferable for higher earners (the NI saving is the kicker).

Other levers, in rough order of power:

• Gift Aid donations: charitable giving extends your basic-rate band and reduces adjusted net income. You do not recover the NI saving, but the income tax mechanics work the same way.
• Bonus deferral: if your employer allows it, push a year-end bonus into the next tax year to keep adjusted net income below £100,000 in the current year.
• Cycle-to-work, EV salary sacrifice, holiday purchase schemes: smaller in pound terms, but each reduces gross taxable pay and so helps keep you under the threshold.
• Carry forward: the £60,000 pension annual allowance plus up to three years of unused allowance carried forward usually gives a £100k+ earner more than enough headroom to sacrifice their way clear of the trap. The pension carry forward calculator shows your available room.

What does not work: ISA contributions (they come from post-tax income and do not affect adjusted net income), and most non-pension salary sacrifice schemes where the value is too small to move the dial.

When the trap gets worse than 60%

For working parents of pre-school children, crossing £100,000 of adjusted net income costs more than tax. It also wipes out Tax-Free Childcare (worth up to £2,000 per child per year) and the 30 hours of funded childcare for children aged 9 months to 4 years in England. A parent of two pre-school children can face an effective marginal rate above 100% on the £100k-£125k slice. A pay rise from £100,000 to £101,000 genuinely makes the family worse off.

Anyone with student loan debt also sees the marginal rate climb. Plan 2 adds 9p on the pound above the threshold. Plan 5 the same. Postgraduate loans add another 6p. Stacking a postgraduate loan on top of the 60% band produces a marginal rate of 71% before NI.

Frequently asked questions

Does the 60% tax trap apply to bonuses?

Yes. A bonus is just additional taxable income. If your basic salary plus the bonus crosses £100,000, the slice above £100,000 hits the 60% effective rate. Many higher earners only encounter the trap once or twice a year when a bonus tips them over, which is why bonus sacrifice into pension is one of the most common escape routes.

Can I claim back the personal allowance after the tax year ends?

You cannot claim back the allowance itself, but you can reduce your adjusted net income retroactively. Personal pension contributions paid before 5 April count against that tax year, as do Gift Aid donations made before 5 April. If you realise you are over £100,000 in March, a single lump sum into a SIPP can restore the allowance and trigger a refund through self-assessment.

Does the trap apply to dividend or self-employed income?

Yes. The personal allowance taper applies to all taxable income. A self-employed worker, landlord, or company director whose total adjusted net income crosses £100,000 loses the allowance at the same rate. Self-employed workers can still use personal pension contributions to bring adjusted net income back below £100,000.

Why is the marginal rate sometimes quoted as 62% rather than 60%?

60% is the income tax marginal rate inside the trap. 62% includes the 2% employee National Insurance still payable on earnings above the upper limit. Most personal finance commentary uses 60% as shorthand for the income tax effect; 62% is the more accurate "real marginal rate" once NI is included.

Is using salary sacrifice to escape the trap legal?

Yes. Salary sacrifice is a long-standing HMRC-recognised arrangement, used by most large UK employers. Using it to keep adjusted net income below £100,000 is not tax avoidance. It is using a mechanism Parliament explicitly created to reduce taxable income in a structured way. HMRC publishes guidance on it directly.

What counts as adjusted net income for the £100,000 threshold?

Adjusted net income is total taxable income (salary, bonuses, dividends, interest, rental income, self-employment profit) minus pension contributions made from net pay grossed up for tax relief, minus Gift Aid donations grossed up. Salary sacrifice contributions never appear in gross pay in the first place, so they reduce adjusted net income automatically without needing to be subtracted.