Earn over £100,000 in the UK and the next pound is taxed at 62%, higher than any headline rate. Here is the mechanism, and what it costs on a real pay rise.
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There is no 60% band in the UK tax tables. The highest rate printed anywhere is 45%. Yet between £100,000 and £125,140 every extra pound you earn costs you 62p, which is more than a millionaire pays on theirs. Nothing about that is an accident, and nothing about it is hidden — it just never appears as a rate.
What happens at £100,000
Everyone gets a personal allowance — the first £12,570 you earn, taxed at nothing. Above £100,000 it starts being taken away, at £1 of allowance for every £2 of income. By £125,140 it is gone entirely.
That withdrawal is the whole story. Earn £2 more and you pay 40% on those £2, as expected. But you also lose £1 of allowance, and that £1 was previously untaxed and is now taxed at 40% too. So £2 of extra income produces £1.20 of extra tax rather than £0.80. That is 60%, and it comes out of the arithmetic rather than out of any rate table.
Why 62% and not 60%
National Insurance is still running underneath. Above £50,270 it charges 2% on everything, and it takes no notice of the personal allowance or its withdrawal. Add that to the 60% and the real figure on each extra pound is 62%.
Above £125,140 the trap ends, because there is no allowance left to lose. The rate drops back to 45% plus 2%, or 47% — genuinely lower than the band beneath it. You can watch the whole shape in the UK salary after tax calculator by moving the salary through £100,000 and watching the total deductions percentage climb and then fall.
What it costs on a real pay rise
Take someone on £100,000 offered £105,000. The rise is £5,000. Income tax on it comes to £3,000, because the £5,000 of income and the £2,500 of lost allowance are both charged at 40%. National Insurance takes another £100.
So £5,000 of pay rise arrives as £1,900. Most people expect a little over half; they get a little over a third.
This is also why the band is worth knowing about before you negotiate. A £5,000 rise and a £5,000 one-off bonus are taxed identically here, but a rise pushes every future year into the same band, while other forms of reward may not.
The usual way out
The allowance is withdrawn on adjusted net income, not on gross salary, and pension contributions reduce it. Somebody on £105,000 who puts £5,000 into a pension is back at £100,000 for this purpose, and the allowance comes back intact.
The £5,000 going into the pension therefore costs £1,900 of take-home pay, because £1,900 is all the rise was ever going to deliver. That is the sharpest pension relief available anywhere in the system. Set the pension percentage in the calculator to see it: at £105,000 the difference between contributing nothing and contributing £5,000 is smaller than the contribution itself.
None of this is advice about whether to do it — money in a pension is money you cannot spend for decades. It is only worth knowing that the trade is unusually favourable in this one band, and unremarkable on either side of it.
Scotland is worse
Scotland sets its own rates and charges 45% where the rest of the UK charges 40% in this range. The same withdrawal arithmetic applies, so the marginal rate there is 67.5% plus 2% National Insurance — 69.5% on each extra pound.
The personal allowance itself is reserved to Westminster, so the £100,000 threshold and the £1-for-£2 taper are identical. Only the rate applied on top differs. Switch the region in the calculator to compare the two directly, or see the other salary and tax calculators as they are added.
Frequently asked questions
Is there really a 60% tax band in the UK?
How much of a £5,000 pay rise do I keep at £100,000?
Does the trap end above £125,140?
Do pension contributions really escape it?
Is it the same in Scotland?
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