Rates verified 5 May 2026 against HMRC Income Tax guidance. (See full methodology.)
2026/27 personal allowance taper · See pension sacrifice needed to escape · Pence-precision maths
Salary plus bonus, dividends, rental income, etc. Pre-pension contributions.
What you already pay into pension annually, including employer match.
Status
You're in the 60% tax trap
£10,000 of your income is taxed at a 60% effective marginal rate. Including NI, your true marginal rate is 62%.
Net take-home
£73,357
After tax, NI, student loan & pension
Total tax & NI
£36,643
33.3% effective rate
Effective PA
£7,570
of £12,570 (£5,000 lost)
Escape the trap
Pension contribution needed
£10,000
Real cost to your take-home
only £3,800
Every £1 sacrificed →
£2.63 in pension
Breakdown by tax band
Personal allowance taper
ANI £110000 − £100,000 = £10000 over taper start. Reduction = £10000 ÷ 2 = £5000. Effective PA = £12,570 − £5000 = £7570.
Income tax
Personal allowance (£0–£7570) on £7,570£0
Basic rate (20%) on £42,700£8,540
Higher rate (40%) on £59,730£23,892
Total income tax£32,432
National Insurance
Main NI (8%) on £37,700£3,016
Upper NI (2%) on £59,730£1,195
Total NI£4,211
What is the 60% tax trap?
The 60% tax trap is the punishingly high effective marginal income tax rate that applies to UK earners with adjusted net income (ANI) between £100,000 and £125,140 in 2026/27. It exists because HMRC tapers the £12,570 personal allowance by £1 for every £2 of income above £100,000, until the allowance is fully withdrawn at £125,140. Each extra £1 in this band suffers 40% income tax on itself, plus a 50p loss of allowance which then incurs 40% tax — totalling 60p of tax on the £1, a 60% effective marginal rate. Adding 2% employee National Insurance brings the true marginal rate to 62%. Earners with student loans (Plan 1, 2, 4 or 5 at 9%) face up to 71%; postgrad loans add 6%, taking the true marginal to 68%. HMRC estimates roughly 1.3 million UK taxpayers are caught in the taper each year, often without realising it until a bonus lands. To see the full pre-trap calculation with all PAYE deductions broken out, use our UK take-home pay calculator.
How to escape the 60% tax trap
The most common and powerful escape is pension contributions. Anything paid into a registered pension scheme reduces ANI £-for-£, so a £15,000 contribution moves a £115,000 earner straight back to £100,000 — full personal allowance restored. Via salary sacrifice, this £15,000 contribution saves 60% income tax + 2% NI = 62% on every £1, so the real cost to take-home is just £5,700. Use our pension tax relief calculator to model every band and method side-by-side. Other legitimate ways to reduce ANI include Gift Aid charity donations (which extend the basic rate band and reduce ANI for taper purposes), and salary sacrifice for non-cash benefits such as the cycle-to-work scheme or an electric company car (BIK rates remain low through 2026/27). Note that EIS, SEIS and VCT investments give income tax relief but do not technically reduce ANI for personal allowance purposes — they help the tax bill but not the taper. If you're a contractor caught in this trap, see also our IR35 inside vs outside calculator for structuring options.
Pension contribution limits and the 60% trap
The annual allowance for pension contributions in 2026/27 is £60,000 (gross, including tax relief and employer contributions). For very high earners with adjusted income above £260,000, a tapered annual allowance applies, reducing by £1 for every £2 above the threshold to a minimum of £10,000. Carry-forward of unused annual allowance from the previous three tax years is permitted, provided you were a member of a registered pension scheme in those years — useful for one-off bonus sacrifice. The lifetime allowance was abolished in April 2024, replaced by the lump sum allowance (£268,275) and lump sum and death benefit allowance (£1,073,100). Salary sacrifice contributions count toward the annual allowance just like personal contributions, and most contractors and high earners stay well within £60k unless they're catching up via carry-forward. The 60% effective relief on trap-band contributions is the most efficient pension build available — see our Pension Pot Projection Calculator to model what these contributions build over time. For those with significant investment income on top of salary, also see our capital gains tax calculator.
Frequently asked questions
What is the 60% tax trap in 2026?
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The 60% tax trap is the effective marginal income tax rate that hits earnings between £100,000 and £125,140 of adjusted net income in 2026/27. For every £2 earned above £100,000, your £12,570 personal allowance is reduced by £1, until it is fully tapered to zero at £125,140. Each extra £1 in this band incurs 40% income tax plus a 40p loss of allowance worth 20p, totalling 60p of tax — a 60% effective marginal rate. Add 2% employee NI and the true marginal rate is 62%.
How much pension do I need to contribute to escape the 60% tax trap?
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Contribute enough to bring your adjusted net income (ANI) down to £100,000. If you earn £115,000, you need a £15,000 gross pension contribution. Via salary sacrifice you save 60% income tax + 2% NI = 62% on that £15,000 — a tax saving of £9,300, so the real cost to your take-home is just £5,700 for £15,000 in your pension. Every £1 sacrificed lands £2.63 in your pension after tax saving.
Does the 60% tax trap apply to bonuses?
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Yes. Bonuses are taxed in the year they are paid and count fully toward adjusted net income. A £20,000 bonus on top of a £105,000 salary pushes your ANI to £125,000 — squarely inside the 60% trap, with all £20,000 of the bonus losing 60p in the £ to HMRC. Pension salary sacrifice on the bonus is the most efficient escape: many employers operate a 'bonus sacrifice' scheme to redirect the bonus straight into a pension before income tax or NI is applied.
What about dividends — am I caught in the 60% trap?
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Dividends count toward adjusted net income, so they can pull you into the trap. However, the marginal hit is slightly different: dividends in the higher rate band are taxed at 35.75% (2026/27), and the personal allowance taper still applies on the underlying income. Practically, a £110,000 income mix of £70k salary + £40k dividends still suffers full PA taper. The escape strategy is the same: pension contributions reduce ANI £-for-£.
Is salary sacrifice better than relief-at-source pension contributions?
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For escaping the 60% trap, yes — salary sacrifice saves 62% (income tax + employee NI), while relief at source saves only 60% (income tax only, with no NI saving). On £10,000 of contributions that's £200 more in your pocket via salary sacrifice. Some employers also pass on their employer NI saving (15%), boosting the effective relief to 77%. Salary sacrifice does reduce your gross salary on paper, which can affect mortgage applications and statutory maternity pay calculations.
Why is it called a 'trap' rather than a tax band?
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Because it's hidden. There is no published 60% tax band in HMRC literature — only 20%, 40% and 45%. The 60% rate emerges from the interaction of the 40% higher rate with the personal allowance taper. Most earners only discover the trap when their bonus or pay rise lands and they realise they took home far less than expected. HMRC estimates roughly 1.3 million UK taxpayers are affected by the taper each year, but the true marginal rate is rarely communicated by employers or payroll software.
Calcsmith provides estimates based on the information you enter and the 2026/27 tax bands. Not financial advice; consult a qualified accountant or independent financial adviser for your situation.