Why every pound between £100,000 and £125,140 is effectively taxed at 60% (62% with NI), how the personal allowance taper creates it, and why pension contributions in this zone get the best relief in the UK tax system.
The UK's headline income tax rates are 20%, 40% and 45%. But between £100,000 and £125,140 the real marginal rate is 60% — higher than anything the additional rate charges — and it appears in no rate table, because it is a side effect rather than a rate.
Above £100,000 of income, your £12,570 personal allowance is withdrawn at £1 for every £2 of extra income, disappearing entirely at £125,140. So a pound earned in the zone costs you 40p of higher-rate tax and drags 50p of previously tax-free allowance into tax at 40% — another 20p. That's 60p per pound, before the 2% employee National Insurance that runs above £50,270 takes the true marginal cost to 62%. The £100,000 threshold has been frozen since 2010, so fiscal drag pulls more people in every year.
Crossing £100,000 can cost more than the taper: eligibility for tax-free childcare and the free childcare hours ends at £100,000 of adjusted net income — a genuine cliff edge worth thousands to a family with young children, lost on the pound that crosses the line.
The trap runs in reverse: a pension contribution that takes your income back below £125,140 earns relief at the same 60% the zone charges — the best relief available anywhere in the UK system. Salary sacrifice does it most efficiently (no NI on the sacrificed pay either, and your employer saves 15% employer NI they may share). Hundred Summers' salary sacrifice calculator computes the exact saving on this year's bands at your actual salary — the 60% zone falls out of the band arithmetic by itself, because the app's engine models the taper rather than a flat marginal rate.
Inside a full plan the question gets sharper: Hundred Summers projects what the sacrificed money becomes by retirement and what tax you pay drawing it back out — usually 15% effective (25% tax-free, the rest at basic rate) against 60%+ relief on the way in.