The 60% Tax Rate Nobody Tells You About Between £100k and £125,140
There's no official 60% tax band in the UK, yet earners just over £100,000 pay it anyway. It's built from a personal allowance taper HMRC never advertises.
By Firoz Khan|25 May 2026|Updated 20 September 2026|8 min read
Ask most people what the top rate of income tax is in the UK and they'll say 45%. That's true above £125,140, but it skips the band that actually catches people off guard: between £100,000 and £125,140, your effective marginal tax rate is 60%, not 45% or even 40%. There's no headline announcement for this. It happens because your personal allowance quietly disappears as you earn more, and HMRC has never needed to publicise it, because nobody in that income band tends to complain loudly, and the mechanism is buried in allowance rules rather than a published tax rate.
The £100,000 cliff edge
The personal allowance, £12,570 for most people, starts being withdrawn once your adjusted net income passes £100,000. It doesn't disappear all at once. For every £2 you earn above £100,000, you lose £1 of your personal allowance, until the allowance hits zero at £125,140. That withdrawal is on top of the 40% higher rate tax you're already paying on income above £50,270, which is what stacks the two effects together and produces the 60% figure.
How the taper actually works
Say you earn £110,000. You're £10,000 over the £100,000 threshold, so under the £2-for-£1 rule you lose £5,000 of your £12,570 personal allowance. That £5,000 of income, which would previously have been tax-free, is now taxed at 40%, because it falls in the higher rate band. So on top of paying 40% on that slice of income as normal, you're also paying 40% tax on income that should have been allowance-protected. The combined effect, 40% direct tax plus the 40% tax on the newly-taxable allowance portion, works out to an effective 60% marginal rate on each additional pound earned in this band.
Worked example: what £110,000 actually nets you
Compare two earners. One earns exactly £100,000 and keeps their full £12,570 allowance. The other earns £110,000, an extra £10,000, but loses £5,000 of allowance in the process, meaning £15,000 of income shifts from being either allowance-protected or normally taxed into the 60% zone. On that £10,000 pay rise, roughly £6,000 disappears in tax and lost allowance effects rather than the £4,000 you'd expect from a flat 40% rate. It's a genuinely worse deal, pound for pound, than earning it at £90,000 or at £130,000, where the taper has either not started or has already finished.
Newsletter
Get the best of our crypto and money content every week
Straight to your inbox, once a week.
By subscribing you agree to receive our weekly newsletter and to our Privacy Policy. No spam, unsubscribe anytime.
Pension contributions can reclaim the allowance
The taper is based on adjusted net income, not gross salary, and pension contributions made through salary sacrifice or personal contributions with tax relief reduce that figure. If you earn £110,000 and pay £10,000 into your pension, your adjusted net income drops back to £100,000, restoring your full personal allowance and avoiding the 60% band entirely. This is one of the few legitimate ways to neutralise the taper, and it means pension contributions in this specific income band are worth considerably more in tax terms than they are for someone earning £60,000, because you're recovering allowance as well as getting standard relief.
Gift Aid does the same job
Charitable donations made under Gift Aid also reduce adjusted net income, using the same mechanism as pension contributions, because the gross value of the donation (the amount before basic rate tax was deducted) is deducted from your income for the purposes of this calculation. A £4,000 donation to charity is treated as a £5,000 gross gift once Gift Aid is applied, and that £5,000 comes off your adjusted net income. For someone in the taper band, this means a portion of every donation is effectively subsidised twice: once through standard higher rate relief, and once through allowance restoration.
Who actually falls into this and why they miss it
This affects anyone with income between £100,000 and £125,140, which in practice tends to be senior professionals, higher earners who've had a bonus year, or anyone who's recently crossed £100,000 through a pay rise or promotion. Most people in this position never see the 60% figure written on anything, because payslips show tax deducted at 40% or 45%, not the combined effect of tax plus allowance withdrawal. Unless you sit down and calculate your effective rate on the marginal pound, or use a calculator built specifically for this band, the taper is invisible in day-to-day payroll.
Why this trap goes unnoticed for years
The 60% rate isn't a rate you're told about, it's a rate you have to work out for yourself by comparing your income against £100,000 and £125,140 and doing the personal allowance maths manually. Because it's framed as an allowance change rather than a tax rate, and because it self-corrects at £125,140 without any action needed, many people simply absorb the extra tax for years without realising a pension contribution or Gift Aid donation could have meaningfully reduced it. If your salary sits in this band, checking your adjusted net income against the £100,000 threshold every tax year is the only way to catch it before it costs you.
A reminder
The FCA risk warning still applies to higher-risk crypto content. Always assess how much risk you are willing to take before buying.
Related reading