The Salary Calc

60% Marginal Rate & Childcare Cliff-Edge

£100k Tax Trap Calculator (2026/27)

Taper Zone

£100k – £125,140

Marginal Tax Rate

60% + 2% NI

In the UK, earnings between £100,000 and £125,140 lose £1 of Personal Allowance for every £2 earned, creating a brutal 60% effective income tax rate. Earning over £100,000 also wipes out 30 Hours Free Childcare. Calculate your exact loss and see how pension contributions eliminate the trap.

Your Income Details

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Inside the 60% Tax Trap Zone

Active Trap

Adjusted Net Income

£109,250

Lost Personal Allowance

£4,625

Extra 60% Tax Penalty

£1,850/yr

child_care Childcare Benefits Lost (Cliff Edge)

Because your Adjusted Net Income exceeds £100,000, you lose ~£7,000/year in 30 Hours Free Childcare & Tax-Free Childcare.

savings

The Pension Solution: Escape the Trap

Sacrificing additional income into your pension legally reduces your HMRC Adjusted Net Income to £99,999, eliminating the 60% tax trap and restoring your childcare.

Extra Pension Required

£9,251/yr

(or £770.92/month)

True Cost in Take-Home Pay

Only £3,515/yr

HMRC pays 62% of your pension pot!

Net financial gain (Tax saved + Childcare protected): +£8,850/yr

How the 60% Tax Trap Works (HMRC Rules)

1. Personal Allowance Taper

The standard tax-free Personal Allowance is £12,570. Once your Adjusted Net Income passes £100,000, HMRC reduces this by £1 for every £2 of income. By £125,140, your personal allowance is £0.

2. Why the Marginal Rate is 60%

On earnings between £100k and £125k, you pay 40% higher rate tax on the money itself, plus 20% extra tax caused by losing your allowance (£0.40 + £0.20 = £0.60 per pound), plus 2% NI (total 62%).

3. The Childcare Cliff Edge

Unlike tax which tapers, 30 Hours Free Childcare and Tax-Free Childcare have an absolute cutoff. Earning even £100,001 cancels the benefit for the whole year.