You become a higher rate taxpayer, and start paying higher rate tax, when your income passes £50,270. But only the pounds above that threshold are taxed at 40%. On a £60,000 salary, just £9,730 is taxed at the higher rate.
How much is taxed at 40%
| Salary | Taxed at 40% | Higher rate tax | Total Income Tax | Take-home pay |
|---|---|---|---|---|
| £55,000 | £4,730 | £1,892 | £9,432 | £42,457 |
| £60,000 | £9,730 | £3,892 | £11,432 | £45,357 |
| £70,000 | £19,730 | £7,892 | £15,432 | £51,157 |
| £90,000 | £39,730 | £15,892 | £23,432 | £62,757 |
England, Wales and Northern Ireland, 2026/27, no pension.
What else changes above £50,270
- National Insurance drops from 8% to 2% on earnings above £50,270.
- Personal Savings Allowance falls from £1,000 to £500 of tax-free interest.
- Child Benefit: the High Income Child Benefit Charge starts at £60,000.
- Pension relief: with relief-at-source schemes, you must claim the extra 20% yourself.
Legal ways to pay less
- Pension contributions, ideally through salary sacrifice, give relief at 40%.
- Gift Aid donations extend your basic rate band.
- ISAs keep interest and investment gains tax-free.
- Marriage-based planning: moving savings to a lower-earning spouse can reduce tax on interest.
The £60,000 to £80,000 Child Benefit zone
If you or your partner claim Child Benefit and the higher earner’s adjusted net income is above £60,000, the High Income Child Benefit Charge claws back 1% of the benefit for every £200 of income over the threshold. Above £80,000, all of it is clawed back. Pension contributions reduce adjusted net income and can reduce or remove the charge.
Self Assessment for higher-rate taxpayers
Most employees taxed through PAYE do not need to file a tax return. You may need one if you have untaxed income, pay the High Income Child Benefit Charge, or want to claim higher-rate relief on relief-at-source pension contributions or Gift Aid.
Fiscal drag
The higher rate threshold has been frozen at £50,270 for several years. As salaries rise with inflation, more people cross it without any real increase in living standards. Planning pension contributions around the threshold has therefore become more valuable.
Scotland
Scottish taxpayers reach a 42% higher rate at a lower income than in England. If you live in Scotland, use the Scottish figures on our calculator.
See your exact figures with the UK take-home pay calculator and our guide to UK Income Tax rates.
Cutting higher rate tax with a pension: a worked example
Take a £60,000 salary in England. As the table shows, £9,730 of it falls in the 40% band. If you sacrificed exactly that amount into your pension, your salary would drop to £50,270 and none of your pay would be taxed at the higher rate.
- Income Tax saved: 40% of £9,730, about £3,892.
- National Insurance saved: 2% of £9,730, about £195.
- Real cost to your take-home pay: roughly £5,640 for £9,730 in your pension.
You do not have to go that far. Every pound sacrificed from the 40% band costs you about 58p, so even a smaller contribution gives strong relief.
Common mistakes
- Thinking a pay rise can leave you worse off. Only the extra pounds are taxed at 40%, so you always keep more, apart from special cases such as the Child Benefit charge.
- Forgetting the £100,000 taper. Above £100,000, your Personal Allowance falls by £1 for every £2 of extra income, which creates a very high effective rate on that slice.
- Not claiming relief at source. If your pension adds only 20% relief, the other 20% must be claimed through Self Assessment or by contacting HMRC.
When to get help
If you have several sources of income, pay the High Income Child Benefit Charge or are close to £100,000, it can be worth speaking to an accountant or regulated adviser. The current bands and thresholds for higher rate tax are listed on gov.uk.
Frequently asked questions
When do you start paying 40% tax?
On earnings above £50,270 in England, Wales and Northern Ireland.
Is all my salary taxed at 40%?
No. Only the part above £50,270 is taxed at 40%; the rest is taxed at 0% and 20%.
How can I avoid higher rate tax?
Pension contributions, salary sacrifice and Gift Aid donations can bring your taxable income below the threshold.
Estimates for information only, not tax advice.
