Help Center
Answers to common questions about the 60% tax trap, adjusted net income, and pension contributions.
Below you'll find answers to the questions we receive most often about the UK tax system, the 60% tax trap, pension contributions, and how to use this calculator. If you can't find what you're looking for here, our detailed guides cover each topic in much greater depth.
Note: These answers are for general educational purposes only. Tax rules are complex and individual circumstances vary — always verify with HMRC's official guidance or a qualified tax advisor before making financial decisions.
Understanding Tax Traps
What is the 60% tax trap?
The '60% tax trap' affects earners between £100,000 and £125,140. For every £2 you earn above £100k, your tax-free Personal Allowance (£12,570) reduces by £1. This results in an effective 60% marginal tax rate on that income portion.
How can I avoid the 60% tax trap?
The most efficient way is 'Salary Sacrifice' or making personal pension contributions. By paying more into your pension, you reduce your 'Adjusted Net Income'. If this figure falls below £100,000, you regain your full Personal Allowance.
What is Adjusted Net Income?
This is your total taxable income MINUS specific tax reliefs like pension contributions (grossed up) and Gift Aid. HMRC uses this figure, not your gross salary, to determine if you lose your Personal Allowance or need to pay the Child Benefit Charge.
High Income Child Benefit Charge?
If your Adjusted Net Income exceeds £60,000, you must pay back 1% of your Child Benefit for every £200 earned above that threshold. Once you hit £80,000, the benefit is fully repaid. Pension contributions can also help reduce this charge.
Do I pay tax on Dividends?
Yes, if they exceed your dividend allowance (currently £500 for 24/25). Dividends are taxed at lower rates than salary (8.75% Basic, 33.75% Higher, 39.35% Additional), but they still count towards your 'Adjusted Net Income' for the 60% trap.
What is Marriage Allowance?
If you are married or in a civil partnership, earning less than £12,570, and your partner pays Basic Rate tax, you can transfer £1,260 of your Personal Allowance to them. This can save up to £252 per year in tax.
Using the Calculator
What is the Marginal Rate View?
The Marginal Rate chart visualizes 'spikes' in your tax liability. It shows exactly how much tax you pay on the *next* pound earned. A red spike at 60% or higher indicates a 'Trap' zone where you lose money faster than basic rates suggest.
How do I compare salaries?
Use the 'Compare' toggle at the top of the dashboard. This splits the screen into Scenario A and Scenario B. You can calculate the difference in take-home pay between a new job offer and your current role, or see the impact of a bonus.
Does this support Scottish Tax?
Yes. In the sidebar, toggle 'Resident in Scotland' to on. Calculations will update to use the specific Scottish Income Tax bands (Starter, Basic, Intermediate, Higher, Advanced, Top) which differ from the rest of the UK.
Is my data stored correctly?
We do not store your financial data on our servers. All calculations happen locally in your browser or via an anonymous API call that is not logged. Your salary details disappear as soon as you close or refresh the page.
Why isn't National Insurance strictly annual?
Unlike Income Tax, National Insurance (Class 1) is calculated per pay period (e.g., monthly). This means you might pay NI in a month where you earn a bonus, even if your annual income is low. Our calculator assumes steady monthly income for simplicity.
Can I check previous tax years?
Yes. Use the Tax Year dropdown in the top header to switch between 2023/24, 2024/25, and 2025/26. The calculator helps you plan ahead or check if you overpaid in previous years.
Need more details?
Check out our full Tax Guide for comprehensive examples and strategies.