The 60% tax trap, explained
Figures as of · Marginal rate calculator
Where the 60% comes from
Above £100,000 of adjusted net income, the personal allowance is withdrawn at £1 for every £2 earned. That withdrawn allowance doesn't just vanish quietly — it becomes taxable at the higher rate, on top of the higher rate already due on the extra pound itself. The taper itself applies UK-wide, but the rates applied to it below are the England, Wales and Northern Ireland ones; Scottish income tax rates are higher in this band, so the trap rate there is higher too.
Work it through on a single extra pound in this band: you pay 40% higher-rate tax on that pound directly. Earning it also costs you 50p of allowance, and that gets taxed at 40% too — another 20%. Add the two together and the pound is effectively taxed at 60% — 62% once the 2% National Insurance on the same pound is counted — even though no single band charges anywhere near that rate on its own.
A concrete example
Take someone whose income moves from exactly the £100,000 threshold up to £110,000 — an extra £10,000. That slice costs them £5,000 of personal allowance, and the combined tax on the extra income plus the newly-taxable allowance comes to about £6,000, with a further £200 of National Insurance on the same slice — leaving roughly £3,800 of the original £10,000 in their pocket. A Plan 2 student loan takes another £900 off that slice, leaving about £2,900 — well under half of what was earned.
Where the band starts and ends
The taper runs from £100,000 until the personal allowance reaches zero — which happens once you've lost all of it, at £125,140. Above that point there's no allowance left to withdraw, so the marginal rate drops back to the additional rate (45%) — still high, but no longer stacked with a disappearing allowance.
A student loan stacks on top
Student loan repayments are calculated separately, on gross pay above your plan's own threshold, regardless of what's happening to your personal allowance. A Plan 2 borrower with income in this band is paying the 60% trap rate, the 2% National Insurance and the plan's 9% — a combined marginal rate around 71% on that slice of income. See how repayments leave your payslip for how that 9% deduction is worked out.
Child Benefit is a separate cliff, lower down
Households claiming Child Benefit face a separate charge — the High Income Child Benefit Charge — that withdraws the benefit over its own, lower band of adjusted net income. By the time income reaches the personal allowance taper the benefit has already been fully clawed back, so the two mechanisms bite on different slices of income rather than stacking on the same pound. Each needs checking on its own; the marginal rate calculator shows where both sit.
Ways people manage it
The taper is based on adjusted net income, and pension contributions reduce that figure — so a large enough pension contribution can pull earnings back out of the band entirely, turning a 60% marginal rate into simple pension tax relief instead. Take the same £10,000 slice from above: paid as salary, it loses roughly £6,000 to tax and allowance withdrawal combined. Directed into a pension instead, none of it crosses into the taper zone at all — the whole amount goes in before the withdrawal mechanism has anything to claw back, leaving standard pension relief as the only tax effect. Salary sacrifice reaches the same result from a different angle: see salary sacrifice and your student loan for how that works alongside a loan.
Timing a bonus
A bonus that lands in a year where it and the rest of your income together still sit under the threshold stays out of the taper; one that carries total income across the line is tapered on the part above it.
Check your own number
The marginal rate calculator sweeps a full salary range and shows exactly where your own cliffs and taper zones sit, including any student loan plan you have.