How much should I salary sacrifice to avoid the 60% tax trap?

Summary

The usual salary sacrifice target for the 60% tax trap is the amount needed to bring adjusted net income back toward £100,000. The trap exists because the personal allowance is withdrawn by £1 for every £2 of adjusted net income above £100,000. Salary sacrifice can help because sacrificed salary is normally removed before income tax and National Insurance, and it can also reduce the adjusted net income used for the taper.

Key takeaways

• The headline target is simple: estimate adjusted net income, then test how much pension contribution brings it back to £100,000.
• The real answer can change if you have bonuses, taxable benefits, gift aid, non-salary income or existing pension contributions.
• Salary sacrifice usually saves employee National Insurance as well as income tax, making it different from a standard relief-at-source pension payment.
• Employer rules matter: minimum wage limits, employer match, bonus sacrifice windows and scheme caps can all affect what you can actually do.

Calculation assumptions

• The example focuses on the personal allowance taper for the 2026/27 UK tax year.
• It assumes the contribution is made through salary sacrifice unless you choose another pension method in the calculator.
• It does not assume a student loan by default, but student loan repayments can make the cash-flow impact larger.
• It assumes the standard personal allowance rules and does not model unusual tax codes automatically.
• Adjusted net income is broader than salary, so include taxable benefits, dividends, savings interest and other relevant income when using the calculator.

Tax breakdown

• The taper starts once adjusted net income exceeds £100,000.
• Every £2 above the threshold removes £1 of personal allowance until the allowance is fully withdrawn at £125,140.
• That lost allowance creates an effective 60% income tax rate across the taper band before National Insurance or student loans are considered.
• A salary sacrifice pension contribution can reduce taxable pay and adjusted net income, so it may both save tax now and move money into your pension.

What this means

This example is best used as a planning prompt, not a one-size-fits-all instruction. First use the 60% trap calculator to estimate the contribution needed to escape the taper. Then use the pension calculator to compare take-home pay, pension added, employer match and any student loan impact. If the contribution is large, check annual allowance, tapered annual allowance and workplace scheme limits before relying on the result.

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