WageThe 60% Tax Trap Explained (£100,000 to £125,140)
Between £100,000 and £125,140, income is effectively taxed at about 60%, even though the highest headline rate on the tax table is 45% and the rate on this band is nominally 40%. The extra bite comes from the Personal Allowance being withdrawn as income rises through this band, which adds a hidden charge on top of the visible 40% rate.
| No pension | £20,000 into pension | |
|---|---|---|
| Personal Allowance | £2,570 | £12,570 |
| Income tax | £39,432 | £31,432 |
| National Insurance | £4,411 | £4,411 |
| Take-home pay | £76,157 | £68,157 |
The £20,000 contribution costs £16,000 from your pay but saves £8,000 in income tax and restores £10,000 of Personal Allowance. With the £4,000 HMRC top-up, total relief is £12,000 - a 60% effective relief rate. Model your own contribution →
Where the 60% rate comes from
In the band between £100,000 and £125,140, two things happen to every extra pound earned. First, it is taxed at the higher rate of 40%. Second, it removes half a pound of Personal Allowance, and that freed-up half-pound - previously tax-free - is now taxed at 40% too.
Add the two together and roughly sixty pence of each extra pound is lost to income tax, which is where the 60% figure comes from. It is a real cost, even though no line on the HMRC rate table ever shows 60% - the rate is the 40% band and the allowance taper acting at the same time.
It is an effect, not an official band
There is no 60% band in law. The effect exists only across the £100,000 to £125,140 range, because that is the only stretch where the allowance is being tapered away. Below £100,000 the allowance is intact and the marginal rate is the ordinary 40%. Above £125,140 the allowance is already zero, so there is nothing left to withdraw and the marginal rate drops back to 45%.
That makes this band the most heavily taxed slice of income in the system - taxed harder at the margin than income above £125,140. Once National Insurance at 2% on earnings above £50,270 is added on top, the all-in marginal rate on this band is higher still.
Who it affects
The trap catches anyone whose adjusted net income crosses £100,000 - not just high basic salaries, but salaries pushed over the line by a bonus, a pay rise, a company car or other benefit in kind, or by rental and dividend income stacking on top of employment income.
Because the boundary is frozen until April 2028 while pay rises, the band draws in more people over time. Someone who was comfortably below £100,000 a few years ago can find that normal pay progression has moved part of their income into the 60% zone.
The pension lever
The standard response is a pension contribution. Because the allowance taper is based on adjusted net income, a contribution made by relief at source or salary sacrifice lowers that figure, and contributing enough to bring adjusted net income back to £100,000 removes the taper and restores the full £12,570 allowance.
The reason this band is so often directed into a pension is the arithmetic: money contributed from the 60% zone effectively attracts relief at around 60%, because it escapes both the 40% tax and the allowance withdrawal. A salary-sacrifice arrangement goes further, since it also removes the National Insurance on that slice of pay. The lever works through the definition of adjusted net income rather than any special rule for high earners.
Frequently asked questions
Is the 60% tax trap a real tax band?
No. The highest headline rate is 45%, and the band itself is nominally 40%. The roughly 60% figure is an effective marginal rate created by the Personal Allowance being withdrawn between £100,000 and £125,140, not a band written into law.
What happens to the marginal rate above £125,140?
Above £125,140 the Personal Allowance is already fully withdrawn, so there is nothing more to lose. The marginal rate falls back to the additional rate of 45%, which is why the £100,000 to £125,140 band is taxed harder at the margin than income above it.
Why do pension contributions come up so often here?
A pension contribution reduces adjusted net income, the figure the taper is based on. Bringing adjusted net income back to £100,000 restores the full £12,570 allowance and removes the 60% effect, so contributions from this band attract relief at around 60% - or more with salary sacrifice, which also saves National Insurance.
General information, not advice. Estimates assume the standard 1257L tax code and typical circumstances; your payslip may differ by a pound or two because HMRC payroll software truncates at each step. Verify with HMRC or an accountant for any decision. WageReckon stores no salary data - the calculators run in your browser.
Rates for the 2026-27 tax year, current as of 24 July 2026. Source: HMRC (gov.uk). Contains public sector information licensed under the Open Government Licence v3.0. Source: HMRC / gov.uk. See how we calculate.