The 60% tax trap visualiser
Between £100,000 and £125,140 of income, the personal allowance tapers away, pushing your real marginal rate well above the headline 40% or 45%.
Your marginal rate
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Assumes salary is your only income and standard tax code. Ignores student loans and benefits in kind. Always take advice before acting.
How it works
Between £100,000 and £125,140, your personal allowance reduces by £1 for every £2 of income above £100,000. That means each extra £100 you earn is taxed at 40% normally, plus an extra 20% on the shrinking allowance, for roughly 60% overall, before employee National Insurance is even added. This tool derives your exact marginal rate by comparing the tax and NI due on your salary against the tax and NI due on £100 more, rather than assuming a fixed 60% figure. A pension contribution that brings your taxable income back to £100,000 restores your full personal allowance, a planning point we cover as part of our self-assessment service for higher earners.
Frequently asked questions
Why is my marginal rate not exactly 60%?
60% ex-NI is the standard shorthand for the effect, but the exact figure depends on where you sit in the taper and whether National Insurance also applies to that slice of income, which this tool calculates precisely rather than assuming.
How does a pension contribution help?
Pension contributions reduce your adjusted net income for personal allowance purposes. Contributing enough to bring your income back to £100,000 restores your full personal allowance, as detailed in our tax-efficient salary guide.
What happens above £125,140?
Above £125,140, your personal allowance is fully gone and you pay the additional rate on income above the higher rate limit, so the marginal rate effect described here is specific to the £100,000 to £125,140 band.
Does this include employee National Insurance?
Yes, the marginal rate figure combines income tax and employee National Insurance on the extra £100 of salary, so it reflects your real marginal cost.
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These results are a simplified illustration based on 2026/27 rates, not advice. Your real position depends on your full circumstances. For a personalised answer, book a free consultation.
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