The 60% Tax Trap Between £100,000 and £125,140
No published tax band says 60%, and yet between £100,000 and £125,140 each extra pound is taxed at an effective 62% once National Insurance is counted. Where the trap starts, what it does to a pay rise, and the one clean way out.
This article represents a personal view and is not financial or tax advice. Tax bands and thresholds change, so check current government guidance and consider your own circumstances before acting on any figure here.
Look up the UK income tax bands and you will find 20%, 40% and 45%. Nowhere does any official table say 60%. And yet between £100,000 and £125,140 of income, each extra pound is taxed at an effective 60%, plus 2% National Insurance, which makes 62%. It catches people precisely because it is invisible in the published bands, and it catches more people every year, because the £100,000 threshold has not moved since it was introduced in 2010 while pay has.
How the Trap Works
The mechanism is the personal allowance being taken away. Above £100,000 of adjusted net income, the £12,570 tax-free allowance is withdrawn at £1 for every £2 you earn, disappearing completely at £125,140. So each extra pound in that window is taxed at 40% directly, and simultaneously drags 50p of previously tax-free income into tax at 40%, which adds another 20p. That is 60p of income tax on the pound, plus 2p of National Insurance. Run through CrestCast's own tax code for 2026/27, a £1,000 slice of pay anywhere between £100,000 and £125,140 keeps you exactly £380.
In Scotland the rates and bands differ and the same taper bites harder: through the app's Scottish tables, the whole £100,000 to £125,140 slice loses 69.5%. The examples in this post use the rest-of-UK set.
What It Does to a Pay Rise
The trap turns good news into arithmetic worth checking. A £2,000 rise taking you from £99,000 to £101,000 keeps you £960: £580 on the first thousand, £380 on the second, an average of 52%. A £10,000 rise from £110,000 to £120,000, landing entirely inside the window, keeps £3,800. The rise is still worth having. It is just worth a good deal less than the headline suggests, and the gap is money most people never realise they are losing, because no payslip prints an effective rate.
The Cliff on Top of the Trap: Childcare at £100,000
For parents of nursery-age children the £100,000 line is worse than a high marginal rate, because two things fall off a cliff there rather than tapering. The working-parent free childcare hours in England and tax-free childcare are both withdrawn completely if either parent's adjusted net income passes £100,000. Not reduced. Withdrawn. For a household with a child in full-time nursery, the support lost can be worth several hundred pounds a month, which means a £1,000 rise that crosses the line can genuinely leave the household worse off than no rise at all.
Child benefit has a gentler version of the same slope, clawed back between £60,000 and £80,000 at 1% for every £200. Both cliffs, and what they do to the case for a four-day week, are worked through in can you afford to go part-time, which approaches the same arithmetic from the hours side.
The Clean Way Out: Pension Contributions
The taper is applied to adjusted net income, and pension contributions reduce it. That makes the trap zone the single most efficient place in the UK tax system to make a pension contribution. Someone on £110,000 who puts £10,000 gross into their pension gives up £3,800 of take-home, because the £10,000 was only ever worth £3,800 to them after the trap had taken its share. The pension receives the full £10,000. And if that contribution brings adjusted net income back to £100,000, the free childcare hours and tax-free childcare come back with it, on top.
The trade is access. Pension money is locked away until the normal minimum pension age, so this is a decision about when you want the money, not just how much of it there is. A contribution that rescues this year's childcare eligibility but leaves you unable to cover next year's spending is not a win. That is a cashflow question, and it deserves a forecast rather than a rule of thumb.
Seeing It in Your Own Numbers
In CrestCast the trap needs no special handling, because the tax code that computes your take-home includes the taper. Schedule the rise on the date it starts and the forecast works out what actually lands. Then compare two saved versions: one taking the rise as cash, one with the pension contribution raised to hold adjusted net income at £100,000, and read the difference across cashflow, profit and loss and net worth over the next decade. One note on mechanics: CrestCast models workplace pension contributions as salary sacrifice, which includes the National Insurance saving. If your scheme is relief at source or net pay the shape of the answer holds, but the exact figures differ.
- Between £100,000 and £125,140 each extra £1,000 keeps you £380: an effective 62% once National Insurance is counted.
- A £2,000 rise from £99,000 keeps £960. A £10,000 rise from £110,000 keeps £3,800.
- At £100,000 the free childcare hours and tax-free childcare are withdrawn entirely, a cliff rather than a taper.
- A £10,000 gross pension contribution at £110,000 costs £3,800 of take-home, and can restore childcare eligibility on top.
The wider question of what any rise is really worth, at every salary and not just inside the trap, is covered in what a £3,000 pay rise is actually worth.
›About the figures in this post
Take-home figures were computed on 03/09/2026 through CrestCast's own 2026/27 tax tables, the same code the app runs: England and Northern Ireland bands, tax code 1257L, no pension deduction or student loan unless stated, rounded to the pound. The Scottish figure uses the app's Scottish bands. The 62% is 60% income tax, which is the 40% higher rate plus the effect of the withdrawn allowance, plus 2% employee National Insurance above the upper earnings limit.
The childcare and child benefit thresholds are from gov.uk, checked 14/08/2026: free childcare eligibility ends when either parent’s adjusted net income passes £100,000, and the High Income Child Benefit Charge runs from £60,000 to £80,000 at 1% per £200. These move at Budgets, so check the current figures before acting on them.
CrestCast does not calculate childcare entitlement or child benefit for you: you enter them as income and bills with dates. What it does calculate is your take-home, with the taper included, and what each version of the decision does to the household over ten years.
Model the rise, and the way out, before April
Schedule the pay rise on its date, set the pension contribution each way in two saved versions, and read what each future actually looks like across cashflow, profit and loss and net worth.
Model it in CrestCast →Put your own numbers in and see the next ten years.
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