Tax Intelligence
60% Tax Trap Calculator
Between £100k and £125,140, you lose £1 of personal allowance for every £2 earned. This creates an effective 62% marginal tax rate (40% income tax + 20% lost allowance + 2% NI). Calculate your exposure and discover pension strategies to escape the trap.
Your Income
Adjusted net income includes salary, bonuses, benefits, and other taxable income, minus pension contributions and certain reliefs.
Before & After Comparison
Impact of Pension Strategy
By sacrificing £10,100 into your pension, you reduce your adjusted net income from £110,000 to £99,999 — escaping the 60% trap zone.
Current
Income
£110,000
Personal Allowance
£7,570
Extra Tax Paid
£2,000
Marginal Rate
62%
With Pension
Income
£99,999
Personal Allowance
£12,570(full)
Extra Tax Paid
£0
Marginal Rate
40%
Pension Sacrifice
£10,100
PA Recovered
+£5,000
Tax Saved
+£2,000
Understanding the 60% Trap
The 60% tax trap occurs when your income falls between £100,000 and £125,140. In this range, you lose £1 of your £12,570 personal allowance for every £2 earned above £100,000.
The Mathematics: For every £1 earned in this zone, you pay 40% income tax plus lose 50p of allowance (taxed at 40% = 20%), plus 2% NI. Total: 62% marginal rate.
The Solution: Salary sacrifice pension contributions reduce your adjusted net income, potentially dropping you below the £100k threshold and restoring your full personal allowance.
Your Tax Trap Exposure
2025/26 Tax Year
Extra Tax From Personal Allowance Loss
£2,000
In The 60% Trap
You are paying an effective 62% marginal tax rate on income between £100,000 and your current income (40% income tax + 20% lost allowance + 2% National Insurance).
Trap Zone Visualization
Personal Allowance Taper Range
Below
£100k
Full PA
Trap Zone
£100k - £125,140
PA Tapers
Above
£125,140
No PA
Escape the Trap
Pension Optimization Strategy
By contributing £10,100 to your pension via salary sacrifice, you can reduce your adjusted net income to just below the £100,000 threshold, restoring your full £12,570 personal allowance and avoiding the 60% trap entirely.
Editor's Note
This strategy works best with salary sacrifice schemes, where both employee and employer NI are saved. The pension contribution grows tax-free and can be accessed from age 55.
Did You Know?
EV salary sacrifice can also reduce your 60% trap exposure. At just 3% BiK in 2025/26, it stacks with pension sacrifice to lower your adjusted net income further.
EV Salary Sacrifice Calculator →