How do I get out of the 60% tax trap?
Between £100,000 and £125,140 your personal allowance is withdrawn and the effective rate is 60%. Above £100,000 childcare support stops entirely. Six questions show what escaping is worth.
Why this exists: 723,000 people in the band · 2.06m over £100k. Typically £2,000–£15,000.
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Rates as at 6 April 2026 — the 2026/27 tax year.
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The rules behind this
Every figure above comes from one of these. Where the tool has interpreted rather than calculated, it says so in the finding.
The personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000, producing an effective 60% rate to £125,140.
Gross pension contributions and Gift Aid donations reduce adjusted net income.
Tax-Free Childcare and the extended free hours are withdrawn entirely where either parent has adjusted net income over £100,000.
Benefits in kind are employment income and count towards adjusted net income.
A salary sacrifice must be agreed before the earnings are earned, in writing.
Questions people ask
Why is 60% not in the rate table?
Because it is not a rate. It is what you get when 40% tax is charged on a pound of income while 50p of personal allowance is also withdrawn and taxed at 40%. HMRC publishes the two rules separately and never adds them up, which is why most people in the band have no idea they are in it.
Is the childcare really worth more than the tax?
For a family with two pre-school children, usually yes. Tax-Free Childcare is up to £2,000 per child and the funded hours are worth several thousand more. Both stop at exactly £100,000, so the last pound under the line can be worth thousands.
Can I really earn more and take home less?
Inside the taper with young children in nursery, yes. It is the clearest example of a cliff edge in the UK system, and it is the reason salary sacrifice exists for people at this income.
Does an ISA help?
No. An ISA shelters what the money earns, but the money going in has already been taxed and nothing about it changes adjusted net income. Only a pension contribution, Gift Aid or a sacrifice moves the figure the threshold is tested on.
What if my income varies?
Look at it in February or March, once most of the year is known, rather than committing in April to a guess. The contribution only has to be made before 5 April, so there is no advantage to deciding early and real risk in getting it wrong.