{"id":82,"date":"2026-07-29T09:00:00","date_gmt":"2026-07-29T09:00:00","guid":{"rendered":"https:\/\/payslp.com\/blog\/?p=82"},"modified":"2026-07-04T17:47:49","modified_gmt":"2026-07-04T17:47:49","slug":"60-percent-tax-trap-explained","status":"publish","type":"post","link":"https:\/\/payslp.com\/blog\/guides\/60-percent-tax-trap-explained\/","title":{"rendered":"The 60% Tax Trap Explained (\u00a3100,000\u2013\u00a3125,140)"},"content":{"rendered":"

Earn between \u00a3100,000 and \u00a3125,140 and your effective tax rate on that slice isn’t 40% or 45% \u2014 it’s 60%. This genuinely surprises people, and it’s one of the strangest quirks in the UK tax system.<\/p>\n

Why it happens<\/h2>\n

Your Personal Allowance tapers away once you earn over \u00a3100,000 \u2014 you lose \u00a31 of allowance for every \u00a32 you earn above that line, until it’s gone entirely at \u00a3125,140. So on top of paying 40% higher-rate tax on that income, you’re also losing tax-free allowance, which pushes the real marginal rate to roughly 60%.<\/p>\n

The legitimate ways around it<\/h2>\n

Pension contributions and salary sacrifice both reduce your “adjusted net income” for this calculation \u2014 if that brings you back under \u00a3100,000, you avoid the trap entirely on that portion, while still getting full tax relief on the contribution. It’s one of the few points in the tax system where paying more into a pension has an outsized, genuinely worthwhile benefit.<\/p>\n

Model your own position with the Payslp salary calculator<\/a> and the budget planner<\/a>.<\/p>\n

<\/p>\n

Seeing it visually<\/h2>\n

\"Effective<\/p>\n

The chart shows how the effective marginal rate spikes specifically within the \u00a3100,000\u2013\u00a3125,140 band, then drops back down to the standard 45% additional rate once the Personal Allowance has fully disappeared.<\/p>\n

Frequently asked questions<\/h2>\n

Is this an official tax rate?<\/strong>
\nNo \u2014 there’s no separate “60% band” published by HMRC. It’s the combined effect of the 40% higher rate plus the Personal Allowance taper, which together produce an effective 60% marginal rate on that specific slice of income.<\/p>\n

Does this affect National Insurance too?<\/strong>
\nNo, National Insurance is unaffected by the Personal Allowance taper \u2014 this trap is purely an Income Tax effect.<\/p>\n

<\/p>\n

Related reading<\/h2>\n