Question 1

How much of my pay rise will I keep?

Accepted Answer

The amount you keep depends on your marginal tax rate. A basic rate taxpayer keeps about 72% of a rise (after 20% tax and 8% NI). Higher rate taxpayers keep about 58% (40% tax + 2% NI). If the rise takes you into the Personal Allowance taper zone (£100k–£125,140), you could lose up to 60% of each extra pound.

Question 2

What is the 60% tax trap?

Accepted Answer

When your income is between £100,000 and £125,140, you lose £1 of Personal Allowance for every £2 earned above £100,000. Combined with 40% income tax and 2% NI, this creates an effective marginal rate of around 60%. Our calculator warns you if your pay rise crosses into this zone.

Question 3

Does a pay rise affect my child benefit?

Accepted Answer

If your Adjusted Net Income exceeds £60,000, the High Income Child Benefit Charge (HICBC) starts clawing back child benefit at 1% per £200 above the threshold. Full clawback occurs at £80,000. Our calculator flags if your rise triggers HICBC.

Question 4

Can pension contributions reduce the tax on my pay rise?

Accepted Answer

Yes. Salary sacrifice pension contributions reduce your taxable income before tax and NI, effectively reducing the tax burden on your pay rise. This is especially valuable if a rise pushes you into the 60% trap zone — sacrificing income back below £100,000 can recover your full Personal Allowance.

Pay Rise Calculator

Before vs After