The 60% tax trap, in your numbers
Earn between £100,000 and £125,140 and you lose £1 of tax-free personal allowance for every £2 you earn — so that slice of income is really taxed at 60%, not 40%. This shows exactly what the trap is costing you, and the pension contribution that gets your full allowance back and what it actually costs after relief. 2025/26 rates, England, Wales & Northern Ireland. Free, no sign-up.
A guide, not tax advice. Uses 2025/26 rates for England, Wales and Northern Ireland (Scotland has its own bands). It assumes the standard £12,570 personal allowance and a relief-at-source personal pension; salary sacrifice and net-pay schemes reach the same place by a slightly different route. It doesn't model student loans, the High Income Child Benefit Charge, dividends or the annual allowance taper on very high incomes. Check your own position with an accountant or financial adviser before acting. Nothing you type here leaves your browser.
A 40% taxpayer, quietly paying 60%.
It's the allowance taper. Everyone gets a tax-free personal allowance — £12,570 in 2025/26. But once your income passes £100,000, you lose £1 of it for every £2 you earn. By £125,140 it's gone entirely. That lost allowance is income that used to be tax-free and is now taxed at 40%.
So each £1 in the band stings twice. Earn another £1 over £100,000 and you pay 40p in higher-rate tax on it — plus you lose 50p of allowance, and that 50p is now taxed at 40% too, which is another 20p. Forty pence plus twenty pence is 60p of tax on every extra pound. A £5,000 pay rise in this band leaves you just £2,000.
A pension contribution is the usual escape. Pension contributions reduce your "adjusted net income" — the figure the taper is measured against. Put enough in to bring it back to £100,000 and you get the whole allowance back. Because you're avoiding that 60% rate, every £1 in your pension can cost you as little as 40p. This tool works out the exact contribution and the cost for your income.
Pensions aren't the only lever. Gift Aid donations also reduce adjusted net income, and so do things like salary sacrifice for extra holiday or an electric car. The principle is the same: get the number HMRC measures back below £100,000.
Mind the limits. You can normally pay in up to £60,000 a year across all pensions (or 100% of your earnings if lower), including employer contributions, and still get relief. Very high earners can have that annual allowance tapered down. If a big one-off contribution is on the cards, check the allowance first.
Your whole home, properly organised.
Stead keeps the home side of your money in one place — the mortgage and bills, the rental income and expenses, the certificates and renewals — so when it's time to think about tax, the figures you need are already to hand.