UK 60% Tax Trap Calculator

It is the effective marginal rate on income between £100,000 and £125,140. Your Personal Allowance of £12,570 is withdrawn by £1 for every £2 of adjusted net income above £100,000. So on each extra £100 you earn you pay £40 of higher rate tax and also lose £50 of allowance, on which £20 more tax becomes due — £60 of tax on £100 of income. It is not a statutory rate band, which is why it does not appear on the GOV.UK rate tables.

It starts at £100,000 of adjusted net income and ends at £125,140, at which point the entire £12,570 Personal Allowance has been withdrawn. Above £125,140 the marginal rate falls back to the 45% additional rate — so counter-intuitively, someone earning £130,000 faces a lower marginal rate than someone earning £110,000. These thresholds are frozen and are not rising with inflation.

£1 for every £2 above £100,000. At £110,000 of adjusted net income you are £10,000 over, so you lose £5,000 of allowance and keep £7,570. At £120,000 you lose £10,000 and keep £2,570. At £125,140 and above the allowance is zero. The taper applies to adjusted net income, not gross salary, which is the distinction most people miss.

Broadly your total taxable income from all sources — salary, bonus, benefits in kind, rental profits, dividends, savings interest — less certain reliefs, principally gross personal pension contributions and grossed-up Gift Aid donations. It is the figure the taper is measured against. Because pension contributions and Gift Aid reduce it directly, they are the two main levers for getting back under £100,000.

The standard route is a pension contribution large enough to bring adjusted net income down to £100,000, usually via salary sacrifice for an employee. Gift Aid donations work identically. Both give effective relief of 60% on the amount contributed within the band. Other options include deferring a bonus into the next tax year where the employer permits it, or transferring income-producing assets to a lower-earning spouse.

60p in the pound on the portion inside the band. On a £120,000 income, contributing £20,000 gross to a pension takes adjusted net income to £100,000, restores the full £12,570 allowance, and cuts the Income Tax bill by £12,000 — exactly 60% of the contribution. The £20,000 still belongs to you inside the pension, so the effective cost of putting it there is £8,000.

Yes, and this is how most people fall in unexpectedly. A salary of £95,000 with a £15,000 bonus produces £110,000 of adjusted net income, losing £5,000 of allowance even though the basic salary is comfortably below the threshold. Many employers allow you to sacrifice all or part of a bonus directly into a pension before it is paid, which avoids the problem entirely and also saves National Insurance.

It can be. Adding employee National Insurance takes it above 60%. For parents, losing entitlement to tax-free childcare and the 30 free hours at exactly £100,000 can create a far sharper cliff — worth thousands per child, and lost entirely on a single pound of extra income rather than tapered. For those families the true effective rate on crossing £100,000 can far exceed 100%.

The Personal Allowance taper is UK-wide and applies to Scottish taxpayers too, but Scottish income tax rates and bands are set separately by the Scottish Parliament, so the resulting combined marginal rate differs from the rest of the UK. This calculator uses the rates for England, Wales and Northern Ireland. Scottish taxpayers should treat the allowance and taper figures as accurate but the tax bands as indicative.

The annual allowance limits how much you can contribute with tax relief, and it is tapered down for those with high income — so the very people trying to escape the £100,000 trap may find their capacity to contribute restricted. Unused allowance from the previous three tax years can often be carried forward. Check your position on our [pension annual allowance calculator](/resources/calculators/uk-pension-annual-allowance) before committing to a large contribution.

Yes. Adjusted net income covers all taxable income, not just employment income. Dividends from your own company, rental profits, savings interest and self-employment profits all count. A director paying themselves a modest salary plus substantial dividends can be well inside the trap. Our [dividend tax calculator](/resources/calculators/uk-dividend-tax) covers how the dividend element is taxed on top.

Capital gains are not part of adjusted net income for the Personal Allowance taper, so a large gain does not itself cost you your allowance. However, gains do interact with your income tax bands in determining whether they are taxed at 18% or 24%, so a high income still pushes gains into the higher CGT rate. See our [UK capital gains tax calculator](/resources/calculators/uk-capital-gains-tax).

It depends on whether you need the money now. Contributing to a pension gives 60% relief but locks the funds away until at least age 55, rising to 57 from 2028, and only 25% is normally available tax-free on withdrawal. If you need liquidity, paying the tax may be the right answer. If you are saving anyway, routing that saving through a pension while in the band is close to unbeatable value.

It creates a mismatch. A pension contribution that cuts your UK bill by 60% may get very different treatment on your US return — US recognition of UK pension contributions depends on the scheme and the US/UK treaty, and a contribution that is fully relieved in the UK may not be deductible in the US. That can leave you with UK relief but no US relief, and foreign tax credits that no longer line up. Read our guide to [US tax on UK pensions and SIPPs](/resources/blog/us-tax-uk-pensions-sipps).

Not automatically — the £100,000 threshold no longer triggers a filing requirement by itself for employees taxed entirely through PAYE. You will still need to file if you have other untaxed income, significant dividends, rental profits, or need to claim higher rate relief on personal pension contributions. Given the taper, most people in this bracket end up filing anyway. Our [Self Assessment calculator](/resources/calculators/uk-self-assessment) helps you estimate the bill.

Yes. The calculator uses the 2026-27 tax year: a £12,570 Personal Allowance, a 20% basic rate on the first £37,700 of taxable income, 40% up to £125,140 and 45% above, with the allowance tapered by £1 for every £2 of adjusted net income over £100,000. These are the published rates on [GOV.UK](https://www.gov.uk/income-tax-rates).

It applies the 2026-27 allowance, taper and Income Tax bands exactly, and derives the marginal rate from the tax computation itself rather than assuming 60%. It covers Income Tax only — National Insurance, student loan repayments, the High Income Child Benefit Charge and the tapered pension annual allowance are not included, and each can raise your true marginal cost further. Dividend and savings income are treated as ordinary income rather than at their own rates.

The calculation runs entirely in your browser and nothing is stored unless you choose to download the branded PDF report, at which point you provide your name and email so we can send it. Phone and address are optional.

If you are close to the tapered annual allowance, have US filing obligations alongside your UK ones, or are weighing a bonus sacrifice against immediate cash needs, the interactions are worth modelling properly before you commit. Book a free 20-minute call with a TaxStone adviser to review your UK and US positions together.