The 60% Tax Trap Calculator
Between £100,000 and £125,140 your personal allowance disappears, pushing your real marginal tax rate to 60%. See how bad it is — and how to claw it back.
Tax year 2026/27 ·
At £115,000, every extra £1 you earn is taxed at an effective 60%.
With employee NI that's 62%. Your personal allowance is £5,070 (you've lost £7,500).
Effective income-tax rate on your next £1
The red plateau is the £100,000–£125,140 trap: 40% higher rate plus 20% from your withdrawn personal allowance.
Where your next £100 of income goes
A £10,000 pay rise from here leaves you just £3,800 better off — 38% of it. £6,000 goes to income tax and £200 to National Insurance.
Escape routes: claw back your allowance
Each of these lowers your adjusted net income below £100,000, reinstating the personal allowance — so in the trap they're relieved at an effective 60%.
A gross pension contribution lowers your adjusted net income, reclaiming the personal allowance. The money stays yours, invested for retirement.
Sacrificing salary cuts your taxable pay before tax and National Insurance, so you also save employee NI (2% in this band). Many employers add their NI saving too.
Gift Aid donations are grossed up by 25% and reduce your adjusted net income, reclaiming the allowance. Unlike a pension, the money goes to charity — not back to you.
How the 60% tax trap works
Everyone gets a tax-free personal allowance — £12,570 in 2026/27. But once your income passes £100,000, that allowance is cut by £1 for every £2 you earn, vanishing entirely at £125,140.
Each extra £100 of income in this band is taxed at 40% (£40) and strips £50 of allowance that would otherwise be tax-free — costing another £20 in tax. That's £60 of tax on £100, an effective 60% marginal rate. Add 2% employee National Insurance and it's 62%; a Plan 2 student loan pushes it to 71%.
The trap is purely about adjusted net income — your taxable income less gross pension contributions and grossed-up Gift Aid donations. Lower that number and the allowance comes back.
Three ways to escape the trap
1. Pension contributions
A gross pension contribution reduces your adjusted net income pound for pound. In the trap, every £1 contributed gets back 60p of tax — so it costs you just 40p net, and the full pound lands in your pension.
2. Salary sacrifice
Sacrificing salary works like a pension contribution but also saves the 2% employee National Insurance in this band — an effective 62% — and many employers add their own NI saving on top.
3. Gift Aid donations
Gift Aid donations are grossed up by 25% and also reduce adjusted net income, reclaiming the allowance at the same effective 60%. The difference: the money goes to charity, not back to you.
Key thresholds (2026/27)
| Income | What happens | Marginal rate |
|---|---|---|
| £50,271 – £100,000 | Higher rate | 40% |
| £100,000 – £125,140 | Personal allowance withdrawn | 60% |
| Over £125,140 | Allowance gone, additional rate | 45% |
Scotland uses different income tax bands and rates. This calculator shows rUK (England, Wales & Northern Ireland) figures only.
How this calculator works
The calculator computes your 2026/27 income tax twice — once at your current
adjusted net income, once after your planned pension contribution or Gift Aid
donation — using the rUK bands and the personal allowance taper
(allowance reduced £1 per £2 over £100,000). The difference is your
real saving, expressed as an effective marginal rate.
- Uses England/Wales/NI bands; Scottish rates differ.
- Employee NI (2% above the Upper Earnings Limit) is included where shown; student loan repayments are shown separately if selected.
- Assumes PAYE employment income; other income types (dividends, savings) have different rates.
Sources
- GOV.UK — Income Tax rates and Personal Allowances — bands and the £100,000 allowance taper
- GOV.UK — Personal Allowances: adjusted net income — how pension and Gift Aid reduce the taper
- GOV.UK — Rates and thresholds for employers — employee National Insurance rates
Full formulas and worked examples for every calculator are on our methodology page.
Frequently asked questions
- What is the 60% tax trap?
- Between £100,000 and £125,140 of income, your £12,570 personal allowance is withdrawn by £1 for every £2 you earn. That lost allowance is taxed at 40% on top of the 40% higher rate, giving an effective marginal rate of 60% (62% with employee National Insurance).
- How do I avoid the 60% tax trap?
- Pension contributions, salary sacrifice and Gift Aid donations all reduce your adjusted net income. Bringing it back below £100,000 reinstates the full personal allowance, so contributions in this band attract an effective 60% of relief.
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