Threshold FAQ

What is the 60% tax trap?

It is the effective tax band created when the Personal Allowance is withdrawn between £100,000 and £125,140.

Why it is called 60%

In that income range, each extra £2 of income can cost you £1 of Personal Allowance. The result is that part of the income is taxed at 40% and you also lose some tax-free allowance, which creates an effective 60% band for many employees.

Why it matters

Best next pages

Use Adjusted Net Income Calculator, then Bonus / Pay Rise Calculator or Salary Sacrifice Calculator to see the effect in your own numbers.