60% Tax Trap Calculator UK 2026/27
Calculate how the Personal Allowance withdrawal affects your effective tax rate between £100,000 and £125,140. Find strategies to escape the trap.
Pension reduces your adjusted income
The 60% Tax Trap Zone
Marginal Rate
62%
Effective Rate
34.2%
Contribute to Pension
£10,000
To bring income to £100,000
Estimated Tax Saved
£10,211
By contributing £10,000 to your pension, you save up to 62% in tax - effectively getting a £6,200 boost to your retirement savings.
Calculation Methodology
Calculates Personal Allowance reduction (£1 lost per £2 over £100k), income tax at 40%, and NI at 2%. The effective 62% marginal rate combines 40% IT + 20% effective rate from PA loss + 2% NI.
Official Sources
Important: Results are estimates based on standard HMRC rules. Your actual tax may differ based on your specific tax code, benefits, or HMRC adjustments. Always verify with your employer or a qualified accountant.
Frequently Asked Questions
What is the 60% tax trap?
The 60% tax trap occurs between £100,000 and £125,140 income. In this zone, for every £2 you earn, you lose £1 of Personal Allowance. Combined with 40% income tax and 2% NI, your marginal rate is effectively 62% - the highest effective rate in the UK tax system.
How does Personal Allowance withdrawal work?
Once your adjusted net income exceeds £100,000, your £12,570 Personal Allowance is reduced by £1 for every £2 earned above £100,000. At £125,140, your Personal Allowance is completely gone. This hidden 'tax' adds an extra 20% to your marginal rate (40% of the £1 lost).
How can I avoid the 60% tax trap?
The main strategies are: 1) Pension contributions (salary sacrifice is most efficient) to bring adjusted income below £100k, 2) Charitable donations via Gift Aid, 3) Timing bonuses across tax years, 4) Childcare vouchers/salary sacrifice benefits. Each £1 contributed can save up to 62p in tax.
Is it worth earning more in the 60% zone?
Financially, you still take home 38% of each additional pound earned - but this is poor value. Many high earners prefer to maximize pension contributions instead, effectively getting a 62% return on their pension investment due to tax saved.
Does the 60% trap affect Child Benefit?
Yes, there's a separate High Income Child Benefit Charge between £60,000-£80,000 (2026/27). If you're in the 60% trap and also receiving Child Benefit, your effective marginal rate can exceed 70% in some income bands.