The £100k tax trap: Personal Allowance taper
Above £100,000 of adjusted net income you lose £1 of your £12,570 Personal Allowance for every £2 earned, so it is gone entirely at £125,140. Between those points the effective Income Tax rate is 60% (67.5% for Scottish taxpayers, who pay the 45% advanced rate in this range).
Why the rate is 60%
Each extra £1 over £100,000 is taxed at 40%, and also removes 50p of allowance that is then taxed at 40% — another 20p. Add 2% NI and the marginal deduction is 62%.
Knock-on effects
Crossing £100,000 can also end eligibility for Tax-Free Childcare and the extended free childcare hours, which can cost more than the tax itself for some families.
Considerations to explore
Pension contributions and salary sacrifice reduce adjusted net income and are commonly used to stay below the taper. The effect on your own pay depends on your full income.
Methodology, assumptions and limitations
- Figures are the 2026/27 rates held in the same tax settings that power every calculator on this site.
- Assumes a standard 1257L tax code unless stated otherwise.
- General educational information, not regulated financial or tax advice.
- Your own position depends on your full circumstances — check GOV.UK or HMRC for your case.
UK Finance Planning provides calculation and planning tools for education and comparison. It is not a financial adviser, is not authorised by the Financial Conduct Authority, and is unconnected to any similarly named advice firm. All results are estimates.
Related tools and guides
- Income Tax calculator — Tax paid in each band.
- Salary sacrifice calculator — Compare pension methods.
- UK tax bands 2026/27 — Every rest-of-UK rate and threshold.
- Child Benefit tax charge — How the charge works above the threshold.