{"id":5830,"date":"2020-06-30T11:49:51","date_gmt":"2020-06-30T10:49:51","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=5830"},"modified":"2026-10-29T06:52:44","modified_gmt":"2026-10-29T06:52:44","slug":"what-is-the-60-percent-tax-trap","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/high-earner-tax-returns\/what-is-the-60-percent-tax-trap\/","title":{"rendered":"What is the 60% tax trap?"},"content":{"rendered":"\n<p>If you&#8217;re earning over \u00a3100,000, here&#8217;s what you need to know before 5 April.<br><\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-neutral m-align-left\">\n    <div class=\"b-block-body\">\n        <h2><b>Key takeaways<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The 60% tax trap is an effective marginal tax rate that hits earners between \u00a3100,000 and \u00a3125,140.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It happens because your tax-free Personal Allowance is gradually withdrawn as your income rises above \u00a3100,000.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For earnings between \u00a3100,000 and \u00a3125,140, the effective income tax rate hits 60% \u2014 not because of a higher tax band, but because your Personal Allowance is gradually withdrawn.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The good news: there are proven ways to reduce it before 5 April.<\/span><\/li>\n<\/ul>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-cta-mini m-mint m-align-left\">\n    \n    <div class=\"b-cta-mini__content\">\n\n        \n        <h2 class=\"b-cta-mini__title\">Hey, have you sorted your tax return yet?<\/h2>\n\n        \n        \n        <div class=\"b-cta-mini__body\">\n            <div class=\"b-block-body\"><p><span class=\"notion-enable-hover\" data-token-index=\"0\">Avoid costly mistakes and let Taxfix take care of it for you. Our UK-accredited accountants make filing quick and stress-free, starting from just \u00a399.<\/span><\/p>\n<\/div>\n        <\/div>\n\n        \n        \n        <div class=\"b-cta-mini__action\">\n\n            <a data-js=\"openAuth\" data-location=\"\" data-view=\"signup\" href=\"https:\/\/taxfix.com\/en-uk\/assessment\/signup\" class=\"gtm-get-started-button c-button  m-large\" onClick=\"javascript:setVariant('taxReturn');\">Start<\/a>\n\n\n        <\/div>\n\n        \n    <\/div>\n<\/div> <!-- .b-cta-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\">How does the 60% tax trap work?<\/h2>\n\n\n\n<p>Everyone in the UK is entitled to a <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/personal-allowance\/\">Personal Allowance<\/a> \u2013 the amount you can earn tax-free. For the 2025\/26 tax year, that&#8217;s \u00a312,570.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-neutral m-align-left\">\n    <div class=\"b-block-body\">\n        <p><span style=\"font-weight: 400;\">The <\/span><b>income tax<\/b><span style=\"font-weight: 400;\"> rates in the 2025\/26 tax year \ud83d\udc47<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>Income<\/strong><\/td>\n<td><strong>Tax rate<\/strong><\/td>\n<td><strong>Tax band<\/strong><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Up to \u00a312,570<\/span><\/td>\n<td><span style=\"font-weight: 400;\">0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Personal allowance<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u00a312,571 to \u00a350,270<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Basic rate<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">\u00a350,271 to \u00a3125,140<\/span><\/td>\n<td><span style=\"font-weight: 400;\">40%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Higher rate<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">over \u00a3125,141<\/span><\/td>\n<td><span style=\"font-weight: 400;\">45%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Additional rate<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n\n<p><strong>Where does the 60% come from?<\/strong><\/p>\n\n\n\n<p>For every extra \u00a32 you earn in the \u00a3100,000\u2013\u00a3125,140 band, you pay 40% tax on that income and lose \u00a31 of tax-free allowance, which is then taxed at 40% too. That&#8217;s \u00a31.20 in tax on every \u00a32 of income:<strong> an effective rate of exactly 60%<\/strong>.<\/p>\n\n\n\n<p>In other words, for every extra \u00a3100 you earn between \u00a3100,000 and \u00a3125,140, you keep just \u00a340 after income tax. And that&#8217;s before <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/national-insurance\/\">National Insurance<\/a>. It&#8217;s a rarely discussed quirk of the UK tax system, and it catches a lot of people off guard.&nbsp;<\/p>\n\n\n<div class=\"wp-block-image m-zoomable\" data-js=\"zoomable\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/munkedal-3-1440x641.jpeg\" width=\"1440\" height=\"641\" srcset=\"https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/munkedal-3-300x134.jpeg 300w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/munkedal-3-1024x456.jpeg 1024w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/munkedal-3-768x342.jpeg 768w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/munkedal-3-1536x684.jpeg 1536w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/munkedal-3-2048x912.jpeg 2048w, https:\/\/taxfix.com\/en-uk\/wp-content\/uploads\/munkedal-3-1440x641.jpeg 1440w\" class=\"wp-block-image__media\" sizes=\"auto, (min-width: 1000px) 768px, calc(100vw - 48px)\" alt=\"\"><\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>Who does the 60% tax trap affect?<\/strong><\/h2>\n\n\n\n<p>You&#8217;re in the trap if your <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/adjusted-net-income\/\">adjusted net income<\/a> \u2013 not just your salary \u2013 is between \u00a3100,000 and \u00a3125,140. This includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Employees earning over \u00a3100,000<\/li>\n\n\n\n<li>Employees earning \u00a380,000\u2013\u00a3100,000 who receive a large bonus or pay rise<\/li>\n\n\n\n<li>High earners with side income from <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/side-gig\/\">freelancing<\/a>, rental property, or dividends<\/li>\n\n\n\n<li>Directors taking a combination of salary and <a href=\"https:\/\/taxfix.com\/en-uk\/investor-capital-gains-tax-returns\/dividend-tax-rates\/\">dividends<\/a> where the total exceeds \u00a3100,000<\/li>\n<\/ul>\n\n\n\n<p>What is adjusted net income?<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Adjusted net income is your total income \u2013 from all sources \u2013 after <a href=\"https:\/\/taxfix.com\/en-uk\/self-assessment-basics\/deadlines-and-penalties\/how-to-add-pension-contributions-to-my-tax-return\/\">deducting pension contributions<\/a> and Gift Aid donations, but before your Personal Allowance is applied.\u00a0<\/li>\n\n\n\n<li>It&#8217;s the figure HMRC uses to calculate how much of your allowance to withdraw.<\/li>\n<\/ul>\n\n\n\n<p>This is actually where your biggest opportunity lies. Reduce your adjusted net income below \u00a3100,000 and you escape the trap entirely.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Do you need to file a Self Assessment tax return?<\/strong><\/h2>\n\n\n\n<p>Whether you need to file a <a href=\"https:\/\/taxfix.com\/en-uk\/platform\/filing-a-self-assessment-tax-return-with-taxscouts\/\">Self Assessment return<\/a> depends on your full circumstances, not just your salary. If you earn over \u00a3100,000 and have income from dividends, <a href=\"https:\/\/taxfix.com\/en-uk\/the-tax-basics\/capital-gains-tax-rates-uk\/\">capital gains<\/a>, rental property, or other sources, you will almost certainly need to file \u2013 and you&#8217;ll want to, because it&#8217;s how you claim back higher-rate <a href=\"https:\/\/taxfix.com\/en-uk\/calculator\/pension-tax-relief\/\">pension tax relief<\/a> and other reliefs you&#8217;re entitled to.<\/p>\n\n\n\n<p>The <a href=\"https:\/\/taxfix.com\/en-uk\/self-assessment-basics\/when-do-i-need-to-do-a-tax-return\/\">deadline<\/a> for filing your 2025\/26 Self Assessment return online is <strong>31 January 2027<\/strong>.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-cta-mini m-mint m-align-left\">\n    \n    <div class=\"b-cta-mini__content\">\n\n        \n        <h2 class=\"b-cta-mini__title\">Not filed yet?<\/h2>\n\n        \n        \n        <div class=\"b-cta-mini__body\">\n            <div class=\"b-block-body\"><p><span style=\"font-weight: 400;\">Taxfix makes it simple. <\/span><a href=\"https:\/\/taxfix.com\/en-uk\/#signup\"><span style=\"font-weight: 400;\">Get started from \u00a399 <\/span><\/a>If you&#8217;re unsure whether you need to file, use<a href=\"https:\/\/www.gov.uk\/check-if-you-need-a-tax-return\"> HMRC&#8217;s online checker<\/a> or speak to one of our accredited accountants.<\/p>\n<\/div>\n        <\/div>\n\n        \n        \n        <div class=\"b-cta-mini__action\">\n\n            <a data-js=\"openAuth\" data-location=\"\" data-view=\"signup\" href=\"https:\/\/taxfix.com\/en-uk\/assessment\/signup\" class=\"gtm-get-started-button c-button  m-large\" onClick=\"javascript:setVariant('taxReturn');\">Get started<\/a>\n\n\n        <\/div>\n\n        \n    <\/div>\n<\/div> <!-- .b-cta-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What can you do to reduce your tax rate?<\/strong><\/h2>\n\n\n\n<p>There are three main strategies. We&#8217;ve ordered them by impact and accessibility.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>1. Save more into your pension<\/strong><\/h3>\n\n\n\n<p>Most people in their 20s and 30s aren&#8217;t thinking about retirement. But the ones who do are quietly building a significant head start. <a href=\"https:\/\/taxfix.com\/en-uk\/the-tax-basics\/private-pensions-and-tax\/\">Pension contributions<\/a> might not sound exciting, but they&#8217;re the single most effective way to escape the 60% tax trap.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - what&#039;s a pension?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/eFeTtUEEEXs?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<h4 class=\"wp-block-heading\">Why should you save into your private pension?<\/h4>\n\n\n\n<p>Three reasons:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You get your tax back on whatever money you save. That 60%? You can get it back<\/li>\n\n\n\n<li>For every \u00a3100 you contribute while you&#8217;re in the 60% trap, you effectively recover the lost personal allowance and the higher-rate relief \u2013 making pension contributions one of the most tax-efficient moves available to you at this income level.\u00a0<\/li>\n\n\n\n<li>Your employer is required to contribute at least 3% of your qualifying earnings under auto-enrolment, and many contribute more.<\/li>\n\n\n\n<li>Investment growth inside a pension is tax-free. When you come to take your money, you can usually withdraw up to 25% as a tax-free lump sum \u2013 the rest is taxed as income. The minimum age to access your pension is currently 55, rising to 57 in April 2028.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>How does pension tax relief work?<\/strong><\/h4>\n\n\n\n<p>Is your employer using \u201cnet pay\u201d for your pension contribution?&nbsp;<\/p>\n\n\n\n<p>Good news: whatever you save already includes any tax you would have paid. No need to do anything.&nbsp;<\/p>\n\n\n\n<p>Bad news: it\u2019s quite hard to change how much you save whenever you want to save more \u2013 you have to ask your employer whenever you want to save more or less.<\/p>\n\n\n\n<p>Is your employer using \u201c<a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/relief-at-source\/\">relief at source<\/a>\u201d? Then how much tax you can get back depends on how much you earn:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>20% basic rate relief is added to your pension pot automatically by your provider. If you&#8217;re a <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/higher-rate-tax\/\">higher-rate taxpayer<\/a>, you can then claim an additional 20% back through your Self Assessment return \u2013 or 25% if you pay the additional rate.<\/li>\n\n\n\n<li>If you&#8217;re caught in the 60% trap (\u00a3100k\u2013\u00a3125,140), you can claim the full 60% effective relief through your Self Assessment return.\u00a0<\/li>\n\n\n\n<li>If your<a href=\"https:\/\/www.gov.uk\/tax-on-your-private-pension\/annual-allowance\"> <strong>threshold income<\/strong><\/a> exceeds \u00a3200,000 and your adjusted income exceeds \u00a3260,000, your annual allowance starts to taper down \u2013 potentially to as little as \u00a310,000. If you&#8217;re in this position, it&#8217;s worth<a href=\"https:\/\/taxfix.com\/en-uk\/tax-advice\/\"> speaking to a tax accountant<\/a> before making large pension contributions.\u00a0<\/li>\n<\/ul>\n\n\n<div data-react=\"tooltip-provider\"><\/div>\n\n    <div class=\"c-block-calculator\">\n\n    <div class=\"c-block-calculator__container\">\n\n\n    <div data-react=\"pension-calculator\" data-options='{\n        \"title\": \"Pension tax relief calculator\",\n        \"useCompact\": 1\n    }'>\n        <!-- Default calc code -->\n\n        <div class=\"sc-giYgFv fzUHXQ\"><div class=\"sc-ezbkgU bcxCiI\"><div class=\"sc-bYoCmx RakSM\"><div width=\"100%\" aria-expanded=\"false\" class=\"DropdownSelect__Container-sc-1iiysit-0 evEFoA\"><button width=\"100%\" class=\"DropdownSelect__LabelContainer-sc-1iiysit-1 egNJwI\"><span class=\"DropdownSelect__Label-sc-1iiysit-2 loOBxi\">Tax year 2024\/25<\/span> <span class=\"DropdownSelect__Arrow-sc-1iiysit-3 hcHQYJ\">\u25bc<\/span><\/button><\/div><\/div><\/div><div class=\"sc-dPiKHq jvrqXK\"><div class=\"sc-bBHHQT eyRCSV\"><h3 class=\"sc-khQdMy idLFkV\">Your situation<\/h3><img decoding=\"async\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMzQiIGhlaWdodD0iNzYiIHZpZXdCb3g9IjAgMCAzNCA3NiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj48cGF0aCBkPSJNMzIuMjUgMzQuOTMzNVYxLjg0OTYxSDIwLjE0OTlDMTcuNzQ5OSA5LjA0OTYxIDExLjA1IDEzLjY0OTYgMS43NSAxNC4xNDk2VjI2Ljk0OTZDNy45NSAyNi45NDk2IDEzLjg0OTkgMjUuMDQ5NiAxNy44NDk5IDIxLjg0OTZWMzQuOTMzNU0xNy44NDk5IDU1LjUxODhWNzQuMDQ5NkgzMi4yNVY1OS40OTQ1VjU1LjUxODgiIHN0cm9rZT0iYmxhY2siIHN0cm9rZS13aWR0aD0iMiIgc3Ryb2tlLWxpbmVjYXA9InJvdW5kIiBzdHJva2UtbGluZWpvaW49InJvdW5kIi8+PC9zdmc+\" alt=\"Outlined number one\" class=\"sc-cNKpQo gvneOt\"><img decoding=\"async\" src=\"data:image\/svg+xml;base64,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\" alt=\"Image of an arrow\" class=\"sc-AjmZR ctylzc\"><\/div><div class=\"sc-hUpaWb\"><form><div class=\"Form__FormRow-sc-32vt5e-0 ddlwSx\"><div class=\"Form__FormRowTitle-sc-32vt5e-2 coHrqe\">What pension scheme is your employer using?<div class=\"sc-nVjpj fOTxsD\"><span data-hint-default=\"Check with your employer if you\u2019re not sure which one they\u2019re using\"><div class=\"sc-hiwReK haFTQj\">?<\/div><\/span><\/div><\/div><div class=\"sc-jJoQpE kzSgtS\"><div class=\"sc-hiCivh ibNKnF\"><div class=\"Radio__Container-sc-1d2f0wy-0 iLSPPf\"><input type=\"radio\" id=\"pensionSchemenetPayScheme\" name=\"pensionScheme\" class=\"Radio__Input-sc-1d2f0wy-1 brdvpz\" value=\"netPayScheme\"><label for=\"pensionSchemenetPayScheme\" class=\"Radio__Label-sc-1d2f0wy-2 fpqjiq\">Net pay<\/label><\/div><\/div><div class=\"sc-hiCivh ibNKnF\"><div class=\"Radio__Container-sc-1d2f0wy-0 iLSPPf\"><input type=\"radio\" id=\"pensionSchemereliefAtSourceScheme\" name=\"pensionScheme\" class=\"Radio__Input-sc-1d2f0wy-1 brdvpz\" value=\"reliefAtSourceScheme\"><label for=\"pensionSchemereliefAtSourceScheme\" class=\"Radio__Label-sc-1d2f0wy-2 fpqjiq\">Relief at source<\/label><\/div><\/div><\/div><\/div><div class=\"sc-kLwgWK gVgARU\"><div class=\"Form__FormRowTitle-sc-32vt5e-2 coHrqe\">Your annual income<\/div><div class=\"Form__FormRowItem-sc-32vt5e-3\"><div class=\"Input__Container-sc-11yg3hb-0 jiJACg\"><input type=\"number\" min=\"0\" pattern=\"[0-9]*\" name=\"annualIncome\" class=\"Input__InputElement-sc-11yg3hb-1 gvuJbz\"><div class=\"Input__Suffix-sc-11yg3hb-4 eEnjn\">\u00a3<\/div><\/div><\/div><\/div><div class=\"sc-kLwgWK gVgARU\"><div class=\"Form__FormRowTitle-sc-32vt5e-2 coHrqe\">Pension contributions<\/div><div class=\"Form__FormRowItem-sc-32vt5e-3\"><div class=\"Input__Container-sc-11yg3hb-0 jiJACg\"><input type=\"number\" min=\"0\" pattern=\"[0-9]*\" name=\"pensionContributions\" class=\"Input__InputElement-sc-11yg3hb-1 gvuJbz\"><div class=\"Input__Suffix-sc-11yg3hb-4 eEnjn\">\u00a3<\/div><\/div><\/div><\/div><\/form><\/div><\/div><div opacity=\"1\" class=\"sc-jgrIVw gcVyeu\"><div class=\"sc-gSQGeZ mqvVl\"><h3 class=\"sc-iNGGwv dFrXnM\">Results<\/h3><img decoding=\"async\" src=\"data:image\/svg+xml;base64,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\" alt=\"Outlined number two\" class=\"sc-lbhJmS hQoEOj\"><\/div><div class=\"sc-jeqYYF fOQSYu\"><ul class=\"sc-gWXaA-D byUbmH\"><li class=\"sc-cCcYRi TgcgA\"><div class=\"sc-iUKrWq jFZeFw\">Pension contributions<\/div><div class=\"sc-efQUeY cGxXVa\">\u00a31,000<\/div><\/li><li class=\"sc-cCcYRi TgcgA\"><div class=\"sc-iUKrWq jFZeFw\">Automatic tax relief<\/div><div class=\"sc-efQUeY cGxXVa\">\u00a3250<\/div><\/li><li class=\"sc-cCcYRi hBbrsS\"><div class=\"sc-iUKrWq deKGkd\">Extra tax relief you can claim<\/div><div class=\"sc-efQUeY jpRyzu\"><div class=\"sc-ehCIER kgSqiK\">\u00a30<svg width=\"63\" height=\"8\" viewBox=\"0 0 63 8\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><path d=\"M61.2539 3.21541C61.2539 3.21541 39.5443 -1.214 1.25391 6.52213\" stroke=\"black\" stroke-width=\"2\" stroke-linecap=\"round\" stroke-linejoin=\"round\"><\/path><\/svg><\/div><\/div><\/li><\/ul><\/div><\/div><div class=\"sc-dJjZJu isonvD\"><button class=\"sc-hGPAah fmpGnU\"><img decoding=\"async\" src=\"data:image\/svg+xml;base64,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\" alt=\"Illustration\" class=\"sc-dlVyqM lhOciq\"><div class=\"sc-kfPtPH\"><div class=\"sc-fKVsgm kAXsua\">Calculation details<\/div><div class=\"sc-bBHwJV jdTgMA\"><span>Click here<\/span> to show how we&#8217;ve calculated your taxes<\/div><\/div><\/button><div class=\"sc-iwjezw jVHDsA\"><div class=\"sc-cTApHj\"><div class=\"c-body m-smaller\"><h2>How your pension tax relief is calculated<\/h2><p>HMRC will basically give you back the tax that you paid on the income that you used for your pension contribution.<\/p><p>In your case you earned <strong class=\"sc-eJwXpk bOJXdF\">\u00a349,000<\/strong> and contributed <strong class=\"sc-eJwXpk bOJXdF\">\u00a31,000<\/strong> to your pension.<\/p><h3>Automatic Tax relief<\/h3><p>You get <strong class=\"sc-eJwXpk bOJXdF\">\u00a3250<\/strong><\/p><p>Your pension provider will automatically get this for you and add it to your pension pot.<\/p><p>Your pension pot will now be worth <strong class=\"sc-eJwXpk bOJXdF\">\u00a31,250<\/strong>.<\/p><\/div><\/div><\/div><\/div><\/div>\n\n        <!-- END Default calc code -->\n    <\/div>\n\n\n    <\/div> <!-- .c-container -->\n<\/div> <!-- .c-block-calculator -->\n\n\n\n\n\n<h4 class=\"wp-block-heading\"><\/h4>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-cta-mini m-mint m-align-left\">\n    \n    <div class=\"b-cta-mini__content\">\n\n        \n        <h2 class=\"b-cta-mini__title\">Earning other income too?<\/h2>\n\n        \n        \n        <div class=\"b-cta-mini__body\">\n            <div class=\"b-block-body\"><p><span style=\"font-weight: 400;\">Earning over \u00a3100k with dividends, capital gains, or rental income? You need to file a Self Assessment. Taxfix handles the full return \u2013 and finds every relief you&#8217;re entitled to. From \u00a399.<\/span><\/p>\n<\/div>\n        <\/div>\n\n        \n        \n        <div class=\"b-cta-mini__action\">\n\n            <a data-js=\"openAuth\" data-location=\"\" data-view=\"signup\" href=\"https:\/\/taxfix.com\/en-uk\/assessment\/signup\" class=\"gtm-get-started-button c-button  m-large\" onClick=\"javascript:setVariant('taxReturn');\">Get started<\/a>\n\n\n        <\/div>\n\n        \n    <\/div>\n<\/div> <!-- .b-cta-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h3 class=\"wp-block-heading\">2. Ask for a non-cash bonus instead of a cash one&nbsp;<\/h3>\n\n\n\n<p>This works great if you\u2019re starting out in investment banking or consulting, where usually it\u2019s the bonus that sends you into the <strong>60% tax trap<\/strong>.<\/p>\n\n\n\n<p>By reducing your cash earnings by just a bit, you can push your income below \u00a3100,000 \u2013 while also getting your bonus. This works especially well if a bonus or pay rise is about to push you over \u00a3100k for the first time.<\/p>\n\n\n\n<p>For example:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Private medical insurance (including tests, treatments, etc.)<\/li>\n\n\n\n<li>Company car (especially if it\u2019s electric)<\/li>\n\n\n\n<li>Childcare<\/li>\n\n\n\n<li>\u00a0Cycle to Work scheme \u2013 there&#8217;s no HMRC upper limit, but most employers set a cap of around \u00a31,000 for standard bikes or \u00a33,500 for e-bikes. Check what your employer offers.<\/li>\n<\/ul>\n\n\n\n<p>Many of these can be arranged tax-efficiently through your employer, though the tax treatment varies by benefit. Pension contributions and the Cycle to Work scheme offer the most straightforward savings. For others like private medical insurance or a company car, it&#8217;s worth checking the <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/benefits-in-kind\/\">benefit-in-kind<\/a> rules with your employer or a tax accountant.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Invest in startups<\/h3>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-neutral m-align-left\">\n    <div class=\"b-block-body\">\n        <p><strong>Attention:<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">Startup investments are high-risk. Only invest what you can afford to lose, and consider taking financial advice first. B<\/span><span style=\"font-weight: 400;\">e aware that startups are risky investments and your capital is at risk. The money you invest could go up or down.<\/span><\/p>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<p>This is another great way to save on tax. Although be aware that startups are risky investments and your capital is at risk. The This type of investment works similarly to the pension tax relief: you invest in a startup today, and you can get the tax back on that amount through a Self Assessment tax return.<\/p>\n\n\n\n<p>There are three startup investment schemes in the UK:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The<a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/seed-enterprise-incentive-scheme-seis\/\"> <strong>Seed Enterprise Investment Scheme (SEIS)<\/strong><\/a> gives you 50% back<\/li>\n\n\n\n<li>The<a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/enterprise-incentive-scheme-eis\/\"> <strong>Enterprise Investment Scheme<\/strong><\/a> gives you 30% back<\/li>\n\n\n\n<li>The<a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/venture-capital-trust-vct\/\"> <strong>Venture Capital Trust (VCT)<\/strong><\/a> gives you 20% back (for investments made from 6 April 2026 onwards)\u00a0<\/li>\n<\/ul>\n\n\n\n<p>Plus, if the startup makes it big, gains on EIS and SEIS shares are free from Capital Gains Tax \u2013 provided you&#8217;ve held the shares for at least 3 years and your income tax relief hasn&#8217;t been withdrawn. VCT shares are always exempt from <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/capital-gains-tax-cgt\/\">CGT<\/a> on disposal, though you need to hold them for at least 5 years to keep the income tax relief.<\/p>\n\n\n\n<p>How to find startups to invest in if you\u2019re not a professional angel investor:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Equity crowdfunding platforms like <a href=\"https:\/\/www.crowdcube.com\/\"><strong>Crowdcube<\/strong><\/a> or <a href=\"https:\/\/europe.republic.com\/\"><strong>Republic Europe<\/strong><\/a><strong> (<\/strong>formerly Seedrs)\u00a0<\/li>\n\n\n\n<li>VCT brokers like<a href=\"https:\/\/www.hl.co.uk\/investment-services\/venture-capital-trusts\"> <strong>Hargreaves Lansdown<\/strong><\/a> or<a href=\"https:\/\/www.wealthclub.co.uk\/venture-capital-trusts\/\"> <strong>WealthClub<\/strong><\/a><\/li>\n<\/ul>\n\n\n\n<p>Just remember to file a Self Assessment and declare these investments: if you don\u2019t, not only will you not get your tax back, but the gains from the eventual profit (IPO, acquisition, etc.) will not be tax-free either.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What happens if you do nothing?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If you earn \u00a3110,000 and take no action, you&#8217;ll pay an effective 60% tax rate on \u00a310,000 of income. That&#8217;s \u00a36,000 in tax on that slice alone.<\/li>\n\n\n\n<li>A \u00a310,000 pension contribution could recover that \u00a36,000 through effective tax relief &#8211; and that&#8217;s before any investment growth.<\/li>\n\n\n\n<li>The deadline is <strong>5 April<\/strong> (the end of the tax year). Pension contributions made after that date don&#8217;t count for the current year.<\/li>\n<\/ul>\n\n\n\n<p><strong>Don&#8217;t leave money on the table.<\/strong> File with Taxfix and we&#8217;ll find every relief you&#8217;re entitled to.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-cta-mini m-mint m-align-left\">\n    \n    <div class=\"b-cta-mini__content\">\n\n        \n        <h2 class=\"b-cta-mini__title\">Need more help to understand your options?<\/h2>\n\n        \n        \n        <div class=\"b-cta-mini__body\">\n            <div class=\"b-block-body\"><p>We can help. We offer one-off, personal tax advice from an accredited accountant, especially for high-earners. Whether you\u2019re looking to be more tax-efficient, getting your head around adjusted net income or anything else, we\u2019ve got your back. Just \u00a3139 per consultation.<\/p>\n<\/div>\n        <\/div>\n\n        \n        \n        <div class=\"b-cta-mini__action\">\n\n            <a data-js=\"openAuth\" data-location=\"\" data-view=\"signup\" href=\"https:\/\/taxfix.com\/en-uk\/assessment\/signup\" class=\"gtm-get-started-button c-button  m-large\" onClick=\"javascript:setVariant('taxConsultation');\">Get tax advice<\/a>\n\n\n        <\/div>\n\n        \n    <\/div>\n<\/div> <!-- .b-cta-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\">The Bottom Line<\/h2>\n\n\n\n<p>The <strong>60% tax trap<\/strong> is a sneaky one, but now you know how it works, and more importantly, how to dodge it. Whether it\u2019s through pension contributions or other tax-efficient moves, there are ways to keep more of what you earn. Because let\u2019s be real, no one wants to pay more tax than they have to.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">FAQ: 60% tax trap<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">How to avoid 60% tax trap?<\/h3>\n\n\n\n<p>The most effective way is to reduce your adjusted net income below \u00a3100,000 before 5 April. The main options are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Make pension contributions. Every pound paid into a pension reduces your adjusted net income pound for pound. A gross contribution equal to the amount you are over \u00a3100,000 restores your full Personal Allowance and eliminates the trap.<\/li>\n\n\n\n<li>Make Gift Aid donations. Donations to registered charities under Gift Aid reduce your adjusted net income in the same way.<\/li>\n\n\n\n<li>Take non-cash benefits instead of a cash bonus. If a bonus is about to push you over \u00a3100,000, ask your employer about alternatives such as additional pension contributions or a cycle-to-work scheme.<\/li>\n<\/ul>\n\n\n\n<p>The deadline is 5 April. Contributions and donations made after that date do not count for the current tax year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What is the 60% tax bracket?<\/h3>\n\n\n\n<p>There is no official \u201c60% tax bracket\u201d in the UK. The 60% figure is an effective marginal rate \u2013 not a formal band \u2013 that applies to income between \u00a3100,000 and \u00a3125,140. Once your adjusted net income exceeds \u00a3100,000, HMRC withdraws your Personal Allowance at \u00a31 for every \u00a32 earned above that threshold. The Personal Allowance for 2026\/27 is \u00a312,570, so it disappears entirely at \u00a3125,140.<\/p>\n\n\n\n<p>Because you are already paying 40% higher-rate tax, and each extra \u00a32 also costs you \u00a31 of tax-free allowance (taxed at 20%), the combined effect is 60p of tax on every \u00a31 earned in this band. Example: income rises from \u00a3100,000 to \u00a3110,000. That extra \u00a310,000 costs \u00a36,000 in income tax \u2013 an effective rate of 60%.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Do I need to file a Self Assessment if I earn over \u00a3100k?<\/h3>\n\n\n\n<p>Not automatically \u2013 but most people earning over \u00a3100,000 will still need to file. Since April 2024, earning over \u00a3100,000 through <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/paye\/\">PAYE<\/a> alone no longer triggers a mandatory Self Assessment requirement.<br>You will need to file if any of the following apply:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You are self-employed with trading income above \u00a31,000<\/li>\n\n\n\n<li>You have untaxed income from rental property, dividends, or savings interest<\/li>\n\n\n\n<li>You have capital gains above \u00a33,000<\/li>\n\n\n\n<li>You need to pay the High Income Child Benefit Charge<\/li>\n\n\n\n<li>HMRC has written to you asking for a return<\/li>\n<\/ul>\n\n\n\n<p>You will also want to file to claim higher-rate pension tax relief \u2013 the only way to get it back. The online filing deadline for 2025\/26 is 31 January 2027.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Can I avoid the 60% tax trap if I&#8217;m self-employed?<\/h3>\n\n\n\n<p>Yes. The trap applies to anyone whose adjusted net income falls between \u00a3100,000 and \u00a3125,140 \u2013 including <a href=\"https:\/\/taxfix.com\/en-uk\/self-employed-tax-returns\/bookkeeping\/what-is-a-sole-trader\/\">sole traders<\/a> and <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/company-director\/\">company directors<\/a>. As a self-employed person, you can contribute to a personal pension such as a SIPP. Each pound contributed reduces your adjusted net income pound for pound. You cannot use salary sacrifice (that is an employee arrangement), but personal pension contributions and Gift Aid donations work just as well.<br>One key difference: your exposure only becomes visible when you file your Self Assessment return \u2013 sometimes months after the tax year ends. By then, the allowance for that year is permanently lost. Planning before 5 April is essential.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How much pension contribution do I need to avoid the 60% tax trap?<\/h3>\n\n\n\n<p>The formula is simple: gross contribution needed = your adjusted net income minus \u00a3100,000. Example: adjusted net income of \u00a3115,000 means you need a \u00a315,000 gross pension contribution to escape the trap entirely.<br>If you contribute via a relief-at-source pension (such as a SIPP), you only pay 80% yourself \u2013 your provider claims the 20% basic-rate relief automatically. You then claim any additional higher-rate relief through your Self Assessment return. So for a \u00a315,000 gross contribution: you pay \u00a312,000, your provider adds \u00a33,000. Key limits for 2026\/27: the <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/pension-annual-allowance\/\">pension annual allowance<\/a> is \u00a360,000 (or 100% of your UK earnings if lower). You can also carry forward unused allowances from the previous three tax years.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Does the 60% tax trap include National Insurance?<\/h3>\n\n\n\n<p>No \u2013 the 60% figure is income tax only. With National Insurance added, the effective rate is higher. For employees, National Insurance above the Upper Earnings Limit (\u00a350,270 for 2026\/27) is 2%. So the combined marginal rate in the trap zone is 62% \u2013 meaning you keep just \u00a338 from every extra \u00a3100 earned between \u00a3100,000 and \u00a3125,140.<br>For self-employed people, Class 4 National Insurance also applies at 2% above \u00a350,270, giving a similar combined rate. Note: salary sacrifice pension contributions reduce your gross salary, so you also save on National Insurance. However, from April 2029, the National Insurance saving from salary sacrifice pension contributions will be capped at \u00a32,000 per year, following the Autumn Budget 2025.<\/p>\n\n\n\n<p><em>This article provides general information only and is not personalised tax advice.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you&#8217;re earning over \u00a3100,000, here&#8217;s what you need to know before 5 April. How does the 60% tax trap work? Everyone in the UK is entitled to a Personal Allowance \u2013 the amount you can earn tax-free. For the 2025\/26 tax year, that&#8217;s \u00a312,570. Where does the 60% come from? For every extra \u00a32 [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[463],"tags":[416,357,418,420],"class_list":["post-5830","post","type-post","status-publish","format-standard","hentry","category-high-earner-tax-returns","tag-benefits-reliefs-grants","tag-high-earner","tag-invest","tag-pensions-savings-winnings"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is the 60% tax trap? &#8211; Taxfix (formerly TaxScouts)<\/title>\n<meta name=\"description\" content=\"The 60% tax trap occurs when your income exceeds \u00a3100,000, causing you to lose your personal tax allowance.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/taxfix.com\/en-uk\/high-earner-tax-returns\/what-is-the-60-percent-tax-trap\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is the 60% tax trap? 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