More than 500,000 individuals caught in 60% tax trap

19 Jul 2024

A Freedom of Information (FOI) request has revealed that over half a million people are paying up to 60% tax on the top portion of their pay.

Individuals with a salary between £100,000 and £125,140 are at risk of falling victim to a 'tax trap'. This trap takes effect when the 40% higher income tax rate combines with the tapered loss of the £12,570 personal allowance. For every £2 earned above £100,000, an individual loses £1 of their personal allowance.

Once a worker earns £125,140, this reduces to zero. This means that workers caught in the tax trap pay 60p in tax on their earnings plus 2p in national insurance contributions (NICs). The tax rate reverts to 45p in every pound once the personal allowance is lost.

According to the FOI request, the number of workers who fell into the income range rose by 23% to 537,000 between 2021/22 and 2022/23.

Commenting on the issue, a spokesperson for the Treasury said: 'We are committed to keeping taxes on working people as low as possible while maintaining fiscal responsibility, that's why we've pledged to not raise income tax, national insurance or VAT.

'We are a government of wealth creation and believe the best way to responsibly improve living standards is through economic growth by guaranteeing stability, stimulating investment and reforming our planning and skills systems to unlock Britain's potential


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