What is the £100k tax trap?
In the UK, the standard Personal Allowance for tax year 2026/27 is £12,570. That is the slice of income most people can receive before Income Tax starts. Once your adjusted net income rises above £100,000, HMRC reduces the allowance by £1 for every £2 of income over that limit. The allowance reaches zero at £125,140. Between those two points many higher-rate taxpayers face an effective marginal Income Tax rate of about 60% — not because Parliament wrote “60%” into a band table, but because losing allowance while paying 40% tax stacks on top of the headline rate.
Search interest usually centres on phrases like “100k tax trap”, “£100,000 tax trap” or “60% tax trap”. They all describe the same personal allowance taper. Understanding it matters for bonuses, contractor day-rate jumps, dividend top-ups and one-off payments that push you over the line for a single year.
How the taper maths works
Suppose you have £100,000 of adjusted net income. You still receive the full £12,570 allowance. Now imagine an extra £2,000 of income. You lose £1,000 of Personal Allowance. That £1,000 is newly taxable at 40% if you are a higher-rate taxpayer in England, Wales or Northern Ireland, costing £400. Separately, the extra £2,000 of income itself is taxed at 40%, costing £800. Total extra tax: £1,200 on £2,000 of income — a 60% effective rate. Keep going until income hits £125,140 and the allowance is gone.
Above £125,140 the taper has finished. Additional income is generally taxed at the additional rate of 45% (England/Wales/NI) rather than the 60% effective trap rate. Scottish taxpayers can see even higher effective rates while the allowance shrinks, because Scottish higher and advanced rates sit above 40%.
Adjusted net income, not just gross salary
The taper looks at adjusted net income (ANI). ANI starts from total income chargeable to Income Tax and then subtracts certain reliefs — notably many personal pension contributions and Gift Aid adjustments as defined in HMRC guidance. That is why pension planning is the most discussed “escape hatch”. A deductible contribution that reduces ANI by £10,000 can reverse £5,000 of allowance loss and pull you toward or under the £100,000 line.
Salary sacrifice into a pension can also change the picture because the income may never enter your pay as cash. Relief-at-source and net-pay arrangements differ in paperwork even when the economic effect looks similar. Always match the contribution type to how your scheme reports to HMRC.
What this calculator estimates
Enter your income and any pension contributions you believe reduce adjusted net income. Choose England/Wales/NI or Scotland. We estimate remaining Personal Allowance, illustrative Income Tax, and a rough marginal rate label. If you sit inside the taper we also show how much ANI you would need to remove to reach £100,000. The tool ignores National Insurance, student loans, Marriage Allowance, Blind Person’s Allowance, savings and dividend stacking, and overseas aspects.
Scotland note
Scotland sets its own rates on non-savings non-dividend income: starter, basic, intermediate, higher, advanced and top. During the UK-wide personal allowance taper, losing allowance while paying a Scottish rate above 40% can produce effective marginal rates above 60%. Use the Scotland switch for a directional comparison, then confirm with HMRC tables or a Scottish adviser before you act on a large pension contribution.
Practical planning ideas (general information only)
- Map bonuses and share awards against the £100,000–£125,140 corridor.
- Model pension contributions that reduce ANI before you accept a one-off payment.
- Remember Child Benefit / HICBC thresholds are separate from the £100k taper — high earners may face both issues in the same household.
- Do not chase the trap blindly: cash-flow, employer match, annual allowance taper and MPAA rules can outweigh a neat 60% chart.
Worked example
Alex earns £112,000 adjusted net income in England with no pension contribution. Personal Allowance is reduced by £6,000 to £6,570. Taxable income is £105,430. Compared with someone at £100,000, Alex pays materially more than “just 40% on the extra £12,000” because of lost allowance. If Alex instead pays £12,000 into a pension that fully reduces ANI to £100,000, the taper disappears for that year — subject to annual allowance headroom and scheme rules.
Limitations and next steps
This page is an educational estimator for tax year 2026/27. It is not tax advice. Rates and thresholds can change in Budgets. For filing positions, use HMRC’s own calculators where available, keep evidence of contributions, and speak to a qualified adviser if the amounts are large.
Sources: Income Tax rates and Personal Allowances; HMRC Income Tax rates and allowances; Scottish Income Tax rates.