The 60% Tax Trap: Earning Between £100,000 and £125,140

What the trap is

Everyone gets a tax-free Personal Allowance of £12,570. But once your adjusted net income goes over £100,000, the allowance is cut by £1 for every £2 you earn over that. By £125,140 it has gone completely.

Why it is 60%

Between £100,000 and £125,140 every extra £1 you earn is taxed at 40%. But it also removes 50p of your allowance, which means 50p more of your income becomes taxable at 40%, costing you another 20p. So each extra pound faces 40p + 20p = 60p of income tax, before National Insurance (2%).

An example: moving from £100,000 to £110,000 raises take-home pay by only £3,800, even though gross pay rises by £10,000. Your Personal Allowance falls to £7,570.

Ways to reduce the effect

• Pension contributions. Paying into a pension reduces your adjusted net income, which can bring you back below £100,000 and restore your allowance. This works through salary sacrifice, net pay and relief at source (the last extends your basic rate band and gives extra relief through Self Assessment).
• Gift Aid donations also reduce adjusted net income.
• Timing. Bonuses or other income taxed in one year can be planned with an adviser.

Other effects around £100,000

At £100,000 of adjusted net income you can also lose eligibility for Tax-Free Childcare. That can make the real cost of extra earnings higher still, so check how it applies to you.

Use our take-home pay calculator to see the effect on your pay, and consider speaking to a regulated financial adviser.

This guide is general information, not financial or legal advice. Rates checked 8 October 2026 against GOV.UK.