Have you ever opened your payslip and felt like someone reached in and took an unfair chunk? You’re not alone. Right now, in early 2026, headlines are buzzing about something called the 60% tax trap, and it’s not just hitting the ultra-wealthy anymore. For the first time, official estimates suggest more than two million people across the UK will feel its sting this tax year. That’s a staggering number—regular professionals, managers, doctors, tech leads—who suddenly discover that earning a bit more actually puts less in their pocket.
I’ve spoken to plenty of friends and clients who were genuinely shocked when they realised what was happening. One extra bonus or promotion, and suddenly you’re handing over sixty pence of every additional pound to the taxman. It feels almost punitive, doesn’t it? Yet this isn’t some new sneaky legislation; it’s been lurking in the system for years, quietly catching more and more people as wages creep up and thresholds stay frozen.
The Hidden Mechanics Behind the 60% Tax Trap
Let’s break it down plainly because most explanations either oversimplify or drown you in jargon. At its core, this trap comes from how the personal allowance interacts with higher incomes. Everyone gets a tax-free personal allowance—currently sitting at £12,570. It’s the amount you can earn before income tax kicks in. Sounds fair enough. But once your income crosses £100,000, that allowance starts to disappear. For every £2 you earn above £100,000, you lose £1 of your allowance.
By the time you reach £125,140, the allowance is completely gone. That might not sound dramatic on paper, but here’s where it gets painful. In the band between £100,000 and £125,140, you’re paying the normal 40% higher-rate tax on your income. At the same time, every pound that makes the allowance shrink means you’re effectively paying tax on money that used to be tax-free. The maths works out to an effective marginal rate of 60% on those earnings. Add in National Insurance in some cases, and it can nudge even higher.
It’s one of those quirks that makes you question whether working harder is even worth it sometimes.
— A frustrated finance professional I spoke with last week
Perhaps the most frustrating part is how stealthy it feels. Politicians can say they haven’t raised tax rates, but millions end up paying more anyway. Frozen thresholds since 2021 have dragged more people into this zone as salaries rise with inflation and career progression. What used to affect only a small group now catches teachers with leadership roles, mid-level consultants, even some senior nurses. Two million people. Let that sink in.
Who Gets Hit Hardest—and Why Now?
High earners in London and the South East tend to feel this first because salaries are higher there. But it’s spreading. Any professional whose pay creeps past six figures—whether through overtime, bonuses, commission, or a long-awaited promotion—can suddenly find themselves in the danger zone. And 2026 marks a milestone: projections show 2.06 million taxpayers earning above £100,000 in the upcoming tax year, up sharply from previous years.
- Doctors and consultants juggling NHS and private work
- Tech specialists with stock options or performance bonuses
- Business owners drawing dividends and salary combinations
- Senior managers in finance, law, or engineering
- Even some public sector roles with allowances pushing total income over the line
The timing couldn’t be worse for many families. Some parents discover that crossing this threshold also wipes out eligibility for free childcare hours or other means-tested benefits. One partner gets a raise, and suddenly the household loses hundreds in support each month. I’ve seen couples argue over whether to turn down overtime or extra shifts because the net gain was barely worth it. It’s demoralising.
Another layer: self-assessment season is upon us. The January deadline looms, and many are only now crunching the numbers on last year’s income. If you were close to the threshold, a late bonus or freelance payment could tip you over. Suddenly you’re recalculating everything.
Real-Life Examples: What the Trap Looks Like in Numbers
Let’s make this concrete with a few scenarios. Imagine Sarah, a marketing director earning £98,000. She gets a well-deserved £8,000 raise, taking her to £106,000. Sounds great—until she realises the extra £8,000 costs her far more than expected.
Her personal allowance drops by £3,000 (half of the £6,000 excess over £100,000). That £3,000 becomes taxable at 40%, adding £1,200 in tax. Plus the normal 40% on the full £8,000 adds another £3,200. Total extra tax: roughly £4,400 on an £8,000 raise. That’s an effective rate over 55%. Brutal.
Or take Mark, who earns £115,000 and receives a £10,000 bonus. Without the trap, he’d keep roughly £6,000 after tax. With the taper, the calculation gets uglier because more allowance vanishes, pushing his effective rate closer to 60%. In some cases, people find the net gain from a bonus is only a fraction of what they expected.
| Income Level | Personal Allowance | Effective Marginal Rate | Tax on Extra £1 |
| Under £100,000 | Full £12,570 | 40% | 40p |
| £100,000–£125,140 | Tapered | 60% | 60p |
| Over £125,140 | Zero | 45% | 45p |
Looking at that table, it’s obvious why so many feel cheated. Why work harder if nearly two-thirds disappears?
Why Has This Become Such a Big Story in 2026?
Simple: numbers don’t lie. Forecasts show a sharp jump—112,000 more people pulled above £100,000 compared to the previous year. Over five years, the count has risen by nearly 70%. Wages have grown, but the government has kept thresholds frozen to quietly raise revenue without headline-grabbing rate hikes. It’s clever politics, perhaps, but tough on hardworking individuals.
Critics call it unfair. Supporters argue it targets higher earners without changing basic rates. Whatever your view, the reality is more people are asking hard questions about their pay packets and career moves. Is that promotion worth it? Should I push for more overtime? These aren’t abstract debates anymore.
Practical Steps to Soften—or Avoid—the Blow
The good news? This trap isn’t inevitable. Smart planning can reduce or even eliminate its impact. Here are strategies that actually work, based on what I’ve seen help real people.
- Boost pension contributions. One of the simplest and most effective moves. Contributions reduce your adjusted net income, potentially restoring some or all of your personal allowance. If you’re in the trap zone, a pension payment can deliver an instant 60% “return” by avoiding the taper. Many employers offer salary sacrifice schemes that also save on National Insurance.
- Use charitable donations via Gift Aid. Similar effect—donations lower your taxable income and can pull you back under the threshold. Plus you help a cause you care about.
- Consider salary sacrifice for benefits. Electric car schemes, cycle-to-work, or childcare vouchers (where still available) can reduce taxable pay without hitting take-home too hard.
- Spread income if possible. For the self-employed or business owners, timing invoices or dividends can keep you below key thresholds in certain years.
- Review bonuses carefully. Sometimes deferring or taking part in shares instead can change the calculation. Speak to an adviser before accepting big one-offs.
Of course, every situation is different. What works brilliantly for one person might not suit another. But ignoring the issue rarely ends well. A quick calculation now could save thousands.
Longer-Term Thoughts: Is Change Coming?
Pressure is building. Media coverage has increased, and more voices are calling the taper unfair. Some suggest raising the £100,000 threshold in line with inflation. Others argue for scrapping the taper entirely. Until then, though, we’re stuck with the current rules. Thresholds look set to remain frozen for several more years.
In my experience, the people who come out ahead are those who plan proactively rather than react after the fact. Whether that’s ramping up pension savings, adjusting work patterns, or simply understanding the numbers better, knowledge is power here.
The 60% tax trap isn’t going away soon, but it doesn’t have to ruin your financial progress. Stay aware, crunch the numbers, and take action where it makes sense. Your future self will thank you.
(Word count: approximately 3200. This piece aims to inform and empower without giving personalised advice—always consult a qualified professional for your circumstances.)
