The 60% Tax Trap Between £100,000 and £125,140

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There is no 60% rate in any UK tax table. The published bands for England, Wales and Northern Ireland run 20%, 40%, 45%, and nothing in between. The 60% appears anyway, because of a rule that isn’t about rates at all: above £100,000 of adjusted net income, the personal allowance is withdrawn at £1 for every £2. By £125,140 it is gone, and the ordinary 45% band takes over.

The rule is section 35(2) of the Income Tax Act 2007. It arrived in April 2010 and the £100,000 line has not moved since. HMRC puts the 95th percentile of taxpayer income at £93,600 for 2023/24, so the window now starts barely above it.

See your own numbers in the salary calculator

Where the 60% comes from

Take £100 of extra salary at £110,000. Two things happen to it. The £100 itself is taxed at the higher rate: £40. And it drags £50 of your personal allowance into taxable income, where that £50 is also taxed at 40%: another £20. Sixty pounds of tax on a hundred pounds of pay. Employee National Insurance adds its 2% above the upper earnings limit, so the true marginal rate in the window is 62%.

Here is the whole window for 2026/27, worked through:

Gross salaryIncome TaxNITake-homeKept of the raise
£100,000£27,432£4,011£68,557—
£110,000£33,432£4,211£72,357£3,800 of £10,000 (38%)
£125,140£42,516£4,513£78,111£5,753 of £15,140 (38%)

A £10,000 raise from £100,000 delivers £3,800. The same raise from £70,000 delivers £5,800. Past £125,140 the allowance has nothing left to lose and the marginal rate falls back to 47% including NI — a raise at £130,000 is worth more than one at £110,000.

Scotland runs the same withdrawal against its own bands, which are higher in that window: 45% advanced rate, 48% top rate. The trap there runs at 67.5% to 72% before NI.

The childcare cliff at £100,000

The taper is gradual; the childcare rules are not. One pound of adjusted net income over £100,000 removes both the 30 funded childcare hours and Tax-Free Childcare, whatever the other parent earns. With two children in nursery, that pound can cost more than the whole 60% band.

The escape is the pension

Adjusted net income is income after pension contributions and Gift Aid. Salary sacrifice and grossed-up relief-at-source contributions both pull ANI down, and every pound of ANI below £100,000 restores 50p of allowance. Relief in the window is worth roughly 60% before NI.

Worked: on £110,000 in 2026/27, sacrificing 10% puts £11,000 into the pension. ANI falls to £99,000, the full allowance comes back, and take-home falls from £72,357 to £67,977 — the £11,000 of pension costs £4,380 of net pay. You can check the arithmetic yourself: £110,000 with no pension against the same salary sacrificing 10%. The salary calculator recalculates as you type and shows where every pound goes; the split diagram makes the trap visible without any of the arithmetic above.

Two limits apply: the £60,000 pension annual allowance, itself tapered at much higher incomes, and the rule that salary sacrifice can’t take contractual pay below the National Minimum Wage.

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