The 60% Tax Trap Explained (2026/27)

The UK has no 60% tax band. Officially the rates are 20%, 40% and 45%. Yet there is a stretch of income where each additional pound is taxed at an effective 60% — and in Scotland, 67.5%. It is one of the few features of the tax system that surprises people who otherwise understand it well, because it never appears on a payslip.

Why it happens

Everyone starts with a personal allowance of £12,570 that is free of income tax. Above £100,000 of adjusted net income, that allowance is withdrawn at £1 for every £2 earned.

So earning an extra £2 does two things at once. The £2 itself is taxable at the 40% higher rate. But it also strips away £1 of previously tax-free allowance, which becomes taxable too.

Three pounds are now taxed at 40% for every two pounds earned. That is £1.20 of tax on £2 of income — an effective rate of 60%.

The allowance runs out completely at £125,140, which is exactly £100,000 plus twice £12,570. Above that point the marginal rate drops back to the 45% additional rate. The band is a spike, not a ceiling.

What a pay rise actually leaves you

A rise from £100,000 to £110,000 looks like £10,000. After income tax at the effective 60% and National Insurance at 2%, roughly £3,800 reaches your bank account.

Someone on £110,000 keeps less of their next pound than someone on £130,000. That inversion is what makes the band feel unfair, and it is the reason a bonus that pushes you into it can be worth surprisingly little.

Scotland: 67.5%

Scottish taxpayers in the same band face the 45% advanced rate rather than 40%. The same £3-taxable-for-every-£2-earned arithmetic gives an effective 67.5%, the steepest marginal rate anywhere in the UK. Above £125,140 it falls back to the 48% top rate.

What can be done about it

The trap keys off adjusted net income, not gross salary. Anything that reduces adjusted net income below £100,000 restores the allowance.

1. Pension contributions. The most common route. Money paid into a pension reduces adjusted net income pound for pound, so £10,000 contributed by someone on £110,000 both escapes the 60% band and recovers the full allowance. The effective relief on that contribution is 60%.
2. Salary sacrifice. Reduces gross pay before it is ever assessed, so it also saves National Insurance. Bonus sacrifice is a common way to handle a one-off payment that would otherwise land in the band.
3. Gift Aid donations. Charitable giving under Gift Aid also reduces adjusted net income, with the same effect on the allowance.

There is a further consideration for parents: the tax-free childcare and free hours schemes cut off at £100,000 of adjusted net income per parent. Crossing that line can therefore cost far more than the tax itself, and the combined effective rate for a parent of young children can exceed 100% over a narrow range.

Check your own position

The UK take-home pay calculator shows income tax, National Insurance, pension and student loan for any salary, and flags when your income falls inside the taper band. It covers both Scotland and the rest of the UK, and everything runs in your browser.

This page explains how the rules work. It is not tax advice, and pension decisions in particular depend on your wider circumstances and on annual and lifetime limits not covered here — see ourdisclaimer. Figures are for the 2026/27 tax year.