The 60% Tax Trap: UK Take-Home from £100,000 to £125,140
By Jonathan Pimperton, ACA-qualified accountant Published
Quick Answer
£380 kept of every extra £1,000
Every extra £1,000 in this band is worth £380
Between £100,000 and £125,140, each extra £1,000 you earn adds just £380 to your take-home pay. The marginal deduction rate is 62% — the highest anywhere in the UK income tax system, higher than what someone on £200,000 pays on their next pound.
Across the whole band the numbers are stark: earning the full £25,140 from £100,000 to £125,140 adds £9,553 to your annual take-home. You keep 38p of every pound.
Why the trap exists
Nothing in the headline tax bands says “60%”. The trap comes from the Personal Allowance taper: once adjusted net income passes £100,000, your £12,570 tax-free allowance is withdrawn at £1 for every £2 over the threshold. It is fully gone at £125,140.
Follow one extra £100 earned at £110,000:
- £40 — income tax at the 40% higher rate
- £20 — the £100 removes £50 of Personal Allowance, and that £50 becomes taxable at 40%
- £2 — employee National Insurance at 2%
Total: £62 deducted, £38 kept. The taper effectively doubles the higher rate’s bite without any band changing its published rate — which is exactly why so many people only discover the trap when their first payslip after a rise looks wrong.
Take-home through the trap (2026/27)
| Salary | Personal allowance | Income tax | National Insurance | Take-home (year) | Take-home (month) |
|---|---|---|---|---|---|
| £100,000 | £12,570 | £27,432 | £4,011 | £68,557 | £5,713 |
| £110,000 | £7,570 | £33,432 | £4,211 | £72,357 | £6,030 |
| £120,000 | £2,570 | £39,432 | £4,411 | £76,157 | £6,346 |
| £125,140 | £0 | £42,516 | £4,513 | £78,111 | £6,509 |
Each £10,000 step inside the trap adds exactly £3,800 to annual take-home — £317 a month for £833 a month of gross pay. Figures use the standard 1257L code and England/Wales/NI rates; see the full take-home table for every salary from £20,000 to £150,000, or the breakdown of tax at exactly £100,000 — the last point before the trap opens.
Above £125,140, the pressure releases
This is the strangest feature of the trap: once the allowance is fully withdrawn, the taper stops. Income above £125,140 faces the 45% additional rate plus 2% NI — a 47% marginal rate. Earning your way from £120,000 to £130,000 means your marginal rate falls from 62% to 47% partway through. The UK tax system charges its steepest rate not at the top, but in the middle of six figures.
The standard mitigation: pension contributions
The taper is based on adjusted net income, not salary — and adjusted net income is calculated after deducting gross pension contributions and Gift Aid donations. This is why the near-universal response to the trap is pensions: many people earning in this band contribute enough to bring adjusted net income below £100,000, which restores the full Personal Allowance. Every pound contributed inside the trap effectively avoids the 60% rate, and salary sacrifice arrangements save the 2% NI as well.
Whether that trade-off makes sense for you depends on cash-flow needs, existing pension provision, and annual allowance limits — this is a description of how the rules work, not personal advice.
If you have children in childcare, the £100,000 threshold does something worse than taper: it is a cliff edge for Tax-Free Childcare and funded hours. The £100K childcare cliff covers why a rise there can cost more than it pays. And for how rises land at lower salaries, see what a £40,000 to £50,000 rise is actually worth.
Model your own numbers — including pension contributions that pull you back under £100,000 — in the UK Salary Calculator.
Common questions
What is the 60% tax trap in the UK?
Between £100,000 and £125,140 of adjusted net income, your Personal Allowance is withdrawn at £1 for every £2 earned over £100,000. Combined with 40% income tax, that creates an effective 60% income tax rate on this band — 62% once 2% National Insurance is included.
Is the marginal rate in the trap 60% or 62%?
Both figures are correct: 60% is the effective income tax rate alone (40% tax plus 20% from the shrinking allowance). Adding 2% employee National Insurance brings the total marginal deduction to 62%, which is why £1,000 extra gross adds only £380 to take-home.
How much of the £100,000 to £125,140 band do you actually keep?
Earning the full band means £25,140 of extra gross pay, of which you keep £9,553 — exactly 38%. Take-home rises from £68,557 at £100,000 to £78,111 at £125,140.
What happens to the marginal rate above £125,140?
It falls. Once the Personal Allowance is fully gone, the taper stops and income above £125,140 is taxed at the 45% additional rate plus 2% National Insurance — a 47% marginal rate, lower than the 62% in the trap.
How do people avoid the 60% tax trap?
The standard mitigation is pension contributions: adjusted net income is measured after gross pension contributions, so many people in this band contribute enough to bring it below £100,000, which restores the full allowance. Gift Aid donations also reduce adjusted net income. What suits you depends on your circumstances.
Ready to run your own numbers?
This scenario uses specific inputs. Your situation is unique — adjust the numbers to see what applies to you.
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