This tool is for illustration only. Tax rules are complex and your personal circumstances may differ. Always confirm figures with HMRC or a qualified tax adviser before acting.
The 60% tax trap is the band between £100,000 and £125,140 where you lose £1 of your tax-free personal allowance for every £2 you earn. Because that lost allowance gets taxed at 40%, you're effectively paying 40% on your income plus 40% on the allowance you've forfeited — 60% in total. Add 2% National Insurance and it reaches 62% for employees.
The trap is entirely avoidable. A pension contribution reduces your adjusted net income — the figure HMRC uses to calculate the taper. Contribute enough to bring that figure back to £100,000 and your full personal allowance is restored. At 40% tax relief, a £10,000 pension contribution costs you £6,000 in real terms and saves you £4,000 in tax. The government is essentially co-funding your pension. Speak to a financial adviser before making large contributions — individual circumstances vary.