The 60% Tax Trap 2026/27, visualised
The 60% effective marginal rate between £100k-£125,140 in 2026/27. Personal Allowance tapering explained, plus how pension escapes it.
Your position in the trap
Income Tax + employee NI on your next £1 of salary
62.0%
In the taper band: each extra £1 of salary costs 60p in Income Tax and 62p with NI.
- Salary after sacrifice
- £110,000
- Personal allowance
- £7,570
- Allowance lost
- £5,000
- Take-home
- £72,357
How to escape
Out of the additional rate
—
Pension contribution that brings your salary down to £125,140. Each £1 of it saves 47p; below £125,140 you are back in the taper band, where each £1 saves 62p.
Escape entirely
—
Pension contribution that brings your salary down to £100,000: full Personal Allowance restored.
Under salary sacrifice, each £1 you put into a pension inside the taper band costs about 38p of take-home pay, and the full £1 goes into the pension. Pension income is taxed when you draw it, apart from any tax-free lump sum. Trade-off: you cannot normally take the money before age 55, rising to 57 from 6 April 2028 (Finance Act 2022 s.10).
See the full breakdown
What exactly is happening
The UK Personal Allowance is £12,570: the first £12,570 of income is tax-free. Once your adjusted net income passes £100,000, the allowance is reduced by £1 for every £2 above that (Income Tax Act 2007 s.35). By £125,140 it has gone entirely (£12,570 × 2 = £25,140, the width of the band).
The arithmetic: each additional £1 of salary is taxed at the 40% higher rate (40p), and it removes 50p of allowance, which is then taxed at 40% (20p). So the Income Tax on the next £1 is 60p. Add 2% employee NI above the £50,270 Upper Earnings Limit and it is 62p, before any student loan deduction.
The additional-rate threshold is also £125,140, so the moment the taper ends the 45% additional rate begins. On salary the marginal rate drops from 62% to 47% (45% Income Tax plus 2% NI) at exactly £125,140.
Who it catches
The taper is measured on adjusted net income, not salary. That is your total taxable income, less certain reliefs such as pension contributions paid under relief at source and Gift Aid donations (both grossed up). So it can catch someone whose base pay is under £100,000:
- a bonus or overtime that takes total pay for the tax year over £100,000
- taxable benefits in kind, such as a company car, counted on top of salary
- rental profit, self-employed profit, savings interest or dividends on top of a salary
Pension contributions and Gift Aid reduce adjusted net income, so they can restore some or all of the allowance. See GOV.UK: adjusted net income for how the figure is worked out.
Related calculators
60% Marginal Rate Escape Deep-Dive →
Worked mitigation scenarios for income between £100,000 and £125,140.
Pension Contribution →
The escape route. Salary sacrifice to pension reduces adjusted net income £1 for £1.
Capital Gains Tax →
Gains above the basic-rate band are taxed at 24%.
Inheritance Tax →
Estimate the IHT on an estate: £325,000 nil-rate band plus £175,000 residence nil-rate band.
Salary Take-Home →
Full per-month breakdown with pension, student loan, BIK — see the complete picture.
Related calculators
Other UK tax calculators that pair with the Tax Trap.
Frequently asked questions
What is the UK 60% tax trap?
Between £100,000 and £125,140 of adjusted net income, your Personal Allowance is reduced by £1 for every £2 above £100,000. Each extra £1 is taxed at the 40% higher rate and also moves 50p of allowance into tax at 40%, so it costs 60p in Income Tax - a 60% marginal rate, 62% on salary once the 2% employee National Insurance rate is added. This applies in England, Wales and Northern Ireland. Scotland uses the same allowance taper with its own bands, so the rate there is higher.
Why does the 60% only kick in between £100,000 and £125,140?
The Personal Allowance is £12,570 in 2026/27, and £12,570 × 2 = £25,140 - the width of the taper band. At £125,140 the allowance has gone and the taper stops. That is also where the 45% additional rate starts, so above £125,140 the marginal rate on salary is 47% (45% Income Tax plus 2% NI).
Does the 60% trap include National Insurance?
No, the 60% is Income Tax only. Employee Class 1 NI is 8% up to the Upper Earnings Limit (£50,270) and 2% above it, so on salary in the trap the combined rate is 62%. A student loan deduction (9% on Plans 1, 2, 4 and 5) takes it higher. The headline figure in this calculator is Income Tax plus employee NI, so it shows 62% in the band.
How do I escape the 60% tax trap?
Pension contributions reduce your adjusted net income, which is the figure the taper is measured on: salary sacrifice and net-pay contributions reduce it directly, and relief-at-source contributions reduce it by the grossed-up amount. Gift Aid donations are grossed up and deducted in the same way. If you earn £120,000 and sacrifice £20,000 to your pension, your adjusted net income is £100,000 and the full allowance is restored. The pension contribution calculator shows the effect on your pay.
Is the trap worth avoiding or should I just accept it?
Under salary sacrifice, each £1 put into a pension inside the band costs about 38p of take-home pay, because the 62p of Income Tax and NI on it is not paid, and the full £1 goes into the pension. Pension income is taxed when you draw it, apart from any tax-free lump sum. The trade-off is access: you cannot normally take the money before the normal minimum pension age, which is 55 now and rises to 57 from 6 April 2028 (Finance Act 2022 s.10).
Does salary sacrifice save the 60% trap?
Yes. Salary sacrifice reduces your gross salary before Income Tax and NI, so if you sacrifice enough to bring your adjusted net income to £100,000 or below the taper does not apply. It also saves employee NI (2% above the UEL) and employer NI (15%). Whether any of the employer saving is added to your pension depends on your employer's scheme, so ask.
What about the £125,140 'cliff' - does the marginal rate drop?
Yes. At £125,140 the allowance has gone and the taper stops, and the 45% additional rate starts at the same point. So on salary the marginal rate falls from 62% inside the band to 47% above it (45% Income Tax plus 2% NI). Someone on £130,000 pays a lower rate on their next pound than someone on £120,000.
Does this trap apply to Scotland?
Yes. The Personal Allowance and its taper are UK-wide, but a Scottish taxpayer at £100,000 is already in the 45% Advanced Rate band. Each extra £1 in the taper band is taxed at 45% and moves 50p of allowance into tax at 45%, so the Income Tax rate is 67.5%, or 69.5% on salary with 2% NI. The 48% Top Rate starts above £125,140, once the allowance has gone. Use the salary calculator and set the region to Scotland to see the Scottish figures.