Answers · UK 2025/26

How do I avoid the 60% tax trap?

The main way to avoid the 60% tax trap in 2026/27 is to make pension contributions or Gift Aid donations that reduce your adjusted net income below £100,000. A £10,000 pension contribution by someone earning £110,000 can effectively cost just £4,000 after tax relief.

Last updated: 1 June 2026Last reviewed: 1 June 2026How we verify

Full answer

The 60% tax trap hits income between £100,000 and £125,140 because the £12,570 Personal Allowance is tapered away at £1 for every £2 over £100,000. The cleanest escape is to lower your adjusted net income back below £100,000. Pension contributions are the most powerful tool: a gross contribution reduces adjusted net income pound for pound, so it both saves 40% higher-rate relief and restores the lost Personal Allowance, giving 60% effective relief. Worked example: you earn £110,000. Pay £10,000 (gross) into a pension and your adjusted net income falls to £100,000. You reclaim the £5,000 of Personal Allowance that was being withdrawn, plus you get 40% relief on the contribution. Net cost of the £10,000 is roughly £4,000 — the other £6,000 is effectively funded by the tax you no longer pay. Gift Aid donations work the same way: a £800 net donation becomes £1,000 gross and reduces adjusted net income by £1,000. Salary sacrifice arrangements (pension, cycle-to-work, EV cars) also cut gross pay before the trap applies and save National Insurance too. Other levers include deferring a bonus into the next tax year or spreading income with a spouse. In Scotland the same pension strategy works and is arguably more valuable given the 45% advanced rate. Use the Pension and Income Tax calculators to model how much to contribute.