60% Tax Trap Calculator UK: Pension Needed to Escape £100k

Between £100,000 and £125,140 of adjusted net income you lose £1 of personal allowance for every £2 you earn, so each extra pound is taxed at an effective 60% (62% once 2% National Insurance is added on salary). The fix most people use is a pension contribution, because it lowers adjusted net income pound for pound. Enter your income and see the exact contribution that takes you back to £100,000, how much of your allowance it restores, and what it actually costs you once all the tax relief is counted. Figures use 2026/27 income tax and National Insurance rates for England, Wales and Northern Ireland.

How the 60% rate comes about

The personal allowance is £12,570, but it shrinks by £1 for every £2 of adjusted net income above £100,000 and has gone completely at £125,140. Earn £1,000 more in that band and you pay 40% higher-rate tax on it (£400), plus you lose £500 of allowance, which is then taxed at 40% too (£200). That is £600 of tax on £1,000, a 60% marginal rate. Above £125,140 the allowance is already gone, so the rate drops back to 45%.

Adjusted net income is broadly your total taxable income minus gross personal pension contributions and Gift Aid donations. Salary sacrifice works earlier still: the sacrificed pay never counts as income, so it lowers both your tax and your National Insurance.

Relief at source vs salary sacrifice

With a personal pension or SIPP, you pay 80% of the gross contribution and the provider claims the other 20% from HMRC. The rest of your relief, including the restored personal allowance, only arrives once you claim it through Self Assessment, either as a refund or a lower tax bill. With salary sacrifice the relief is immediate: your gross pay falls and your take-home pay falls by far less, and you save the 2% employee National Insurance on earnings above £50,270 as well. Some employers also pass on part of their own National Insurance saving, which this calculator leaves out.

Other things that change at £100,000

If you have young children, the £100,000 line matters even more. Tax-Free Childcare and the funded childcare hours in England are lost if either parent's adjusted net income is expected to go over £100,000 in the tax year, and that loss is not tapered: £1 over can cost the whole entitlement. A pension contribution that brings you to £100,000 or just below can keep it. Check your eligibility on GOV.UK, because the test is applied to your expected income for the period you apply for.

Two limits to watch. Total pension contributions from you and your employer above the £60,000 annual allowance can trigger a tax charge, although unused allowance from the previous three tax years can be carried forward if you were a member of a registered scheme in those years. And tax relief on personal contributions is limited to 100% of your relevant UK earnings. Scotland uses different income tax bands, so the figures here will be out for Scottish taxpayers, although the allowance taper and the £100,000 threshold work the same way.