The UK marginal rate rollercoaster
The headline tax bands say 20%, 40%, 45%. The truth is a rollercoaster: once National Insurance, student loans, the Child Benefit charge and the personal-allowance taper stack up, your next £1 can lose anything from 0p to over 70p. This chart shows the real marginal rate at every income — and where you sit on it.
Your situation
Every income, £0–£200,000
Marginal rate = how much of the next pound of gross pay is lost to Income Tax, employee National Insurance, student loan repayments and the High Income Child Benefit Charge combined. Average rate = total deductions as a share of the whole income. Assumes no pension contributions and PAYE employment.
Why the curve looks like this
Four systems overlap, each with its own thresholds. £12,570: Income Tax and NI both switch on and the rate jumps from 0% to 28%. Student loans add 9% (6% postgraduate) above each plan's threshold. £50,270: higher-rate tax begins but NI drops to 2% — 40% + 2%, plus any loan. £60,000–£80,000: the High Income Child Benefit Charge claws back 1% of Child Benefit per £200, adding roughly 12% per two children. £100,000–£125,140: the personal allowance tapers away, turning 40% into an effective 62% (67.5% in Scotland) — the famous trap. Above £125,140 it settles at 47%. None of these appear in the headline band tables; all of them are real money. Figures are free to cite with a link to this page.
Headline bands and the real marginal rate
The income tax table says 20%, 40%, 45%, and if that were the whole story this page would have no reason to exist. Your marginal rate is what the next pound of income actually loses, and once National Insurance, student loans, Child Benefit clawback and the personal allowance taper pile on, the real figure lurches between 0% and over 70% as income climbs. The chart above draws the whole rollercoaster; the gold line is you.
The stack at four salaries
At £30,000 the next pound loses 28p: basic-rate tax plus 8% NI. At £55,000 it loses 42p, the higher band plus 2% NI, and 51p if there's a Plan 2 loan aboard. At £62,000 with two children the Child Benefit charge joins in and the next pound loses about 54p. And between £100,000 and £125,140 the withdrawal of the personal allowance produces the famous 62p, rising to 71p with a Plan 2 loan. The 45% additional rate above £125,140 is, absurdly, a rate cut. Nobody would design this curve on purpose; it accreted, Budget by Budget, and it decides what your next rise is really worth.
Marginal against average
Marginal is the rate on your next pound; average is the rate on all of them, and it's always far kinder. On £55,000 the total deduction is about 22.8% of gross even though the next pound loses 42p. Both lines matter for different questions. Average answers "what do I live on", which the take-home pay calculator settles. Marginal answers "what is this rise, bonus or extra shift worth", which is why the bonus calculator and this chart agree with each other and often disagree with your gut. Sitting in one of the ugly stretches? The sacrifice optimiser exists precisely for the people on the steep bits.
Common questions
What is a marginal tax rate?
The share of your NEXT pound of income that goes in deductions, as opposed to the average rate on everything you earn. In the UK the marginal rate is often far higher than the headline band because National Insurance, student loan repayments and benefit clawbacks stack on top of Income Tax.
Why is there a 62% tax rate at £100,000?
Between £100,000 and £125,140 you lose £1 of Personal Allowance for every £2 of extra income, so each extra pound is taxed once directly and again through the shrinking allowance. That makes the effective rate 62% including National Insurance in England, Wales and NI — 67.5% plus NI in Scotland — before any student loan.
What is the highest marginal rate in the UK?
For most people it is the £100,000–£125,140 zone: 62% in the rest of the UK or around 69.5% in Scotland, and adding a Plan 2 student loan takes it over 70%. Parents earning £60,000–£80,000 also face high rates from the Child Benefit charge — roughly 54% with two children before any loan.
Is earning more ever not worth it?
You always keep something from extra pay in these ranges, so more gross is still more net — but sometimes only just, and pension contributions in a high-marginal zone are exceptionally good value because they avoid the whole stacked rate. The related pay-rise guide walks through the options.
These results are estimates for general information only and are not financial advice. Check every figure yourself and seek appropriate advice from a qualified professional before making any decision. Read the full disclaimer.