There's no 60% tax band in the UK. You won't find it in any HMRC leaflet. But if you earn between £100,000 and £125,140, that's exactly what you're paying — and most people don't realise until they see the numbers.
Here's how it works, why it exists, and what you can actually do about it.
Everyone in the UK gets a Personal Allowance of £12,570 — the amount you can earn before paying any income tax. But once your income exceeds £100,000, HMRC takes it away.
For every £2 you earn above £100,000, you lose £1 of your Personal Allowance. By the time you reach £125,140, your allowance is completely gone.
The maths works out like this: on income between £100,000 and £125,140, you're paying the normal 40% higher rate tax plus effectively losing your tax-free allowance at the same time. That's 40% tax plus an extra 20% from the lost allowance = 60% marginal rate.
A £1,000 pay rise at £105,000 costs you £600 in tax. You keep £400. That's worse than someone earning £200,000, who keeps £550 of every extra £1,000 (45% additional rate).
Let's say you earn exactly £110,000.
The result: £6,000 tax on £10,000 of extra income. That's 60%.
The goal is simple: bring your "adjusted net income" below £100,000. HMRC uses this figure — not your gross salary — to calculate your Personal Allowance. Here's how:
Money you put into a pension reduces your adjusted net income. If you earn £110,000 and contribute £10,000 to your pension, your adjusted income drops to £100,000 — and your full Personal Allowance comes back.
The cost to you is £10,000 into your pension. But you save £6,000 in tax (60% marginal rate). So it effectively costs you £4,000 to put £10,000 into your retirement pot. That's a 150% return before the pension even grows.
Use our pension tax relief calculator to see the exact numbers for your situation.
If your employer offers salary sacrifice, you can redirect part of your salary into your pension before tax. This reduces both your income tax and your National Insurance — it's even more efficient than personal pension contributions.
On a salary of £110,000, sacrificing £10,000 saves you roughly £6,000 in income tax plus £200 in NI. Your employer saves on their NI too, and some pass that saving on to you.
Check the numbers with our salary sacrifice calculator.
Charitable donations made through Gift Aid also reduce your adjusted net income. If you're donating anyway, this is a bonus — but don't donate just to save tax. You'd be spending £1 to save 60p.
If you're self-employed and have trading losses, these can be offset against your total income, bringing it below the £100,000 threshold. This is situational but worth knowing about.
Yes, you also pay NI. At £110,000, you're paying 2% NI on everything above £50,270. So the true marginal rate in the trap zone is closer to 62%.
If you include student loan repayments (9% for Plan 1/2/4), it can hit 71%.
No. A pay rise always leaves you with more money overall — the 60% rate only applies to the income within the trap zone. But you should think carefully about how you take the money. A £5,000 pay rise might be better taken as a £5,000 pension contribution via salary sacrifice.
If you're negotiating a package and you're in the trap zone, ask for pension contributions, benefits in kind, or other non-cash perks instead of a higher salary. The tax saving is significant.
Anyone with adjusted net income between £100,000 and £125,140. That includes:
If your bonus pushes you into the trap, our bonus tax calculator will show you the damage — and help you decide whether to sacrifice it into your pension instead.
Plug your salary into our income tax calculator to see your exact tax bill. Try entering £100,000 and then £110,000 — you'll see the 60% marginal rate in action.
Enter your salary and watch how the Personal Allowance taper affects your tax bill.