The 60% tax trap explained

Once your adjusted net income passes £100,000, your tax-free Personal Allowance is cut by £1 for every £2 you earn, disappearing entirely at £125,140.

That clawback means each extra pound in this band is effectively taxed at 60% (62% once National Insurance is included) — far higher than the headline 40% higher rate.

A common fix is pension salary sacrifice: contributing enough to bring your adjusted net income back under £100,000 restores the Personal Allowance and avoids the trap.