Between £100,000 and £125,140 your effective marginal rate is 60%. Salary sacrifice into pension eliminates this trap and restores your full Personal Allowance.
Three quirks of the UK tax system create disproportionately high marginal rates at specific income levels. All three can be avoided — usually by redirecting income into a pension.
Between £100,000 and £125,140 your effective marginal rate is 60%.
Every £2 earned above £100,000 withdraws £1 of your Personal Allowance, creating a 60p effective tax rate on top of the 40% higher rate. By £125,140 your entire £12,570 Personal Allowance is gone.
Fix: Salary sacrifice into pension brings adjusted income below £100,000, restoring the Personal Allowance in full.
Full 60% trap guide →Child Benefit is clawed back between £60,000 and £80,000 via HICBC.
For every £200 of adjusted net income above £60,000, 1% of Child Benefit is reclaimed. At £80,000 all Child Benefit is repaid — costing up to £3,974/year for a family with 4 children.
Fix: Salary sacrifice or pension contributions that reduce adjusted net income below £60,000 recover the benefit in full.
HICBC full guide →Your £12,570 tax-free Personal Allowance is withdrawn above £100,000.
The Personal Allowance reduces by £1 for every £2 of income above £100,000. At £125,140 the allowance is zero. This is the mechanism behind the 60% trap — fixing it also fixes the trap.
Fix: Pension contributions, Gift Aid donations, and salary sacrifice all reduce adjusted net income, preserving the Personal Allowance.
Personal allowance taper guide →The salary sacrifice calculator shows exactly how much you can save by redirecting income into pension. Enter your salary and desired contribution to see the tax and NI reduction.
Open salary sacrifice calculator →