How to Make the Most of Your Tax Bands (Without Falling into a 60% Trap)
The UK tax system is like a booby-trapped staircase — climb too fast, and you trip a hidden lever that launches your take-home pay into the abyss.
Most people think “earning more” = “keeping more.” But between the personal allowance taper, the child benefit charge, and national insurance, you can suddenly find yourself working 10% harder and taking home 0% more.
So how do you keep more of what you earn without building your own offshore trust fund in the Cayman Islands?
You learn how to master the tax bands.
🧱 The Building Blocks: 2025/26 UK Tax Bands (England)
Band Income Range Tax Rate
Personal Allowance £0 – £12,570 0%
Basic Rate £12,571 – £50,270 20%
Higher Rate £50,271 – £125,140 40%
Additional Rate £125,141+ 45%
So far, so sensible.
But the drama kicks in at…
🚨 The “Tax Traps” No One Tells You About
🔹 £60,000–£80,000
Child Benefit starts getting clawed back.
Effective marginal rate? Closer to 52%, depending on the number of kids.
🔹 £100,000–£125,140
Lose £1 of Personal Allowance for every £2 over £100k.
Which means an effective marginal rate of 60% in this band.
🔹 £125,140+
You’ve officially lost your entire personal allowance. You’re taxed on everything!
So yes, you might be on six figures — but it’s six figures of pain.
🧠 How to Keep More (Without Becoming a Tax Ninja)
Here’s what actually works — and works within the rules.
✅ 1. Pension Contributions
Whether you’re employed or self-employed, pensions are still one of the best ways to reduce your taxable income.
Earn £110k? Drop £8k net (£10k gross) into your pension to get your income below £100k and get your personal allowance back. That’s a £12,570 tax-free slab you nearly lost.
Earn over £60k? The same rules apply. Put money into your pension to claim back full child benefit.
✅ 2. Salary Sacrifice
Use salary sacrifice to reduce income before tax and NI are even calculated.
It means you take home less now, but pay less tax — and build a stronger pension pot behind the scenes.
This works particularly well for higher earners bumping up against awkward thresholds.
✅ 3. Gift Aid and Charitable Giving
Higher and additional-rate taxpayers can claim extra tax relief via their Self Assessment when they give to charity through Gift Aid.
So if you’re already supporting causes — make sure you’re claiming what you’re owed.
✅ 4. Structuring Family Income
If your partner earns less or has unused allowances (like their personal savings allowance or dividend allowance), consider reallocating assets or income to them.
HMRC doesn’t reward romance, but it does reward efficiency.
💡 Final Thought
You can’t avoid tax — and you shouldn’t try.
But the system is riddled with strange cliffs and sneaky penalties. If you know where they are, you can walk the tightrope without losing half your income to “surprise” charges.
So don’t just earn more. Plan smarter. Pay cleaner. Keep more.
You’re welcome.
p.s. not advice obvs!
This article would be correct as at the time of writing but as we know; rules and regulations can change. Seek advice before taking any action.