What is the 60% tax trap in the UK?

When your adjusted net income crosses £100,000, you lose £1 of the £12,570 Personal Allowance for every £2 earned. The lost allowance is taxed at 40%, on top of the 40% paid on the marginal pound itself - so every £1 earned in the £100,000-£125,140 band carries 60p of Income Tax, rising to 62p including 2% National Insurance. The Personal Allowance is fully tapered at £125,140, after which the additional rate band starts.

Does the 60% trap apply to bonuses?

Yes - bonuses are taxed as employment income and count toward the £100,000 line. A £10,000 bonus on top of a £105,000 salary lands entirely inside the taper band and is taxed at 62% combined marginal. Salary-sacrificing the bonus into pension before payment is the standard counter-move, since the sacrificed amount never enters taxable income.

How does pension contribution help?

Salary-sacrifice pension contributions reduce your gross pay (and so adjusted net income) pound for pound. Sacrificing enough to bring adjusted income to £100,000 reclaims the full Personal Allowance and shifts the saved pound from 62% marginal to (in effect) 0% Income Tax - the most tax-efficient retirement saving available in the UK. Non-sacrifice "relief at source" contributions also reduce adjusted net income for tapering purposes but the timing of the relief is different.

Does the Personal Allowance taper apply in Scotland?

Yes - the Personal Allowance is set by HMRC and applies UK-wide. Scotland has its own income tax bands above the Personal Allowance, so the maths is different but the £100,000 trigger is the same. A Scottish taxpayer in the taper band pays 41% intermediate or 42% higher rate (plus the 20% PA-loss equivalent) for an effective 61-62%.

What about the Child Benefit charge (HICBC) at £100k?

HICBC starts at £60,000 adjusted net income and fully recovers Child Benefit at £80,000 - it is already at 100% before the £100k taper begins. So someone with children in the £100,000-£125,140 band is paying the 62% marginal income tax plus has already lost all Child Benefit on top, making this band the highest effective marginal cost in the UK pay structure for parents.

The UK 60% Tax Trap, Explained

Earn between £100,000 and £125,140 in 2026/27 and your effective marginal tax rate jumps to 60% (or 62% once you add the 2% National Insurance band). It is the single highest marginal rate in the UK income tax system - higher than the 45% additional rate that kicks in above £125,140.

How the Personal Allowance taper works

For 2026/27 the standard Personal Allowance is £12,570 - the slice of income on which you pay no Income Tax at all. HMRC reduces that allowance by £1 for every £2 of adjusted net income above £100,000. So between £100,000 and £125,140 you lose the whole £12,570 allowance, gradually, and once you are above £125,140 you no longer have one.

The arithmetic looks like this: every additional £1 earned in the taper band is taxed at the 40% higher rate, AND it removes 50p of allowance, which is itself taxed at 40%. So each marginal £1 costs you 40p + 20p = 60p in Income Tax alone, before the 2% National Insurance on top. Effective marginal rate: 62%.

Worked example (2026/27 England)

Gross £100,000 - take-home £68,557 a year (£5,713 a month).
Gross £112,570 - take-home £73,334 a year (£6,111 a month).
Gross £125,140 - take-home £78,111 a year (£6,509 a month).

Moving from £100,000 to £125,140 - a £25,140 pay rise - only gives you an extra £9,553 after tax. That is an effective marginal rate of 62.0% across the whole band, the highest you will pay anywhere in the UK income-tax structure.

The pension-sacrifice escape

Because the £100,000 line uses adjusted net income, you can avoid the taper by sacrificing salary into a workplace pension before it ever becomes taxable income. The mechanics:

At £112,570 gross with no pension: take-home £73,334 a year.
At £112,570 gross with 11.16% salary sacrifice (£12,570 into pension): take-home £68,560 a year, plus £12,570 in your pension. Combined value: take-home + pension contribution = £81,130.

You get the full Personal Allowance back, the £12,570 sacrifice escapes tax entirely, and the same £12,570 ends up in your pension pot rather than 38p of every pound disappearing to HMRC.

Other £100k cliff edges

The 60% trap is not the only thing that triggers at £100,000 adjusted net income:

Tax-Free Childcare (£2,000 a child per year) - withdrawn entirely.
30 hours of free childcare for 3-4 year-olds - withdrawn entirely.
Marriage Allowance transfer - the higher-earning spouse loses eligibility.

For parents of pre-school children the £100k cliff can effectively cost £4,000-£6,000 in lost childcare benefits per child on top of the 60% Income Tax marginal rate.

Frequently asked questions

What is the 60% tax trap in the UK?: When your adjusted net income crosses £100,000, you lose £1 of the £12,570 Personal Allowance for every £2 earned. The lost allowance is taxed at 40%, on top of the 40% paid on the marginal pound itself - so every £1 earned in the £100,000-£125,140 band carries 60p of Income Tax, rising to 62p including 2% National Insurance. The Personal Allowance is fully tapered at £125,140, after which the additional rate band starts.
Does the 60% trap apply to bonuses?: Yes - bonuses are taxed as employment income and count toward the £100,000 line. A £10,000 bonus on top of a £105,000 salary lands entirely inside the taper band and is taxed at 62% combined marginal. Salary-sacrificing the bonus into pension before payment is the standard counter-move, since the sacrificed amount never enters taxable income.
How does pension contribution help?: Salary-sacrifice pension contributions reduce your gross pay (and so adjusted net income) pound for pound. Sacrificing enough to bring adjusted income to £100,000 reclaims the full Personal Allowance and shifts the saved pound from 62% marginal to (in effect) 0% Income Tax - the most tax-efficient retirement saving available in the UK. Non-sacrifice "relief at source" contributions also reduce adjusted net income for tapering purposes but the timing of the relief is different.
Does the Personal Allowance taper apply in Scotland?: Yes - the Personal Allowance is set by HMRC and applies UK-wide. Scotland has its own income tax bands above the Personal Allowance, so the maths is different but the £100,000 trigger is the same. A Scottish taxpayer in the taper band pays 41% intermediate or 42% higher rate (plus the 20% PA-loss equivalent) for an effective 61-62%.
What about the Child Benefit charge (HICBC) at £100k?: HICBC starts at £60,000 adjusted net income and fully recovers Child Benefit at £80,000 - it is already at 100% before the £100k taper begins. So someone with children in the £100,000-£125,140 band is paying the 62% marginal income tax plus has already lost all Child Benefit on top, making this band the highest effective marginal cost in the UK pay structure for parents.