UK · Income tax

The £100k tax trap: why you keep so little of a pay rise above £100,000

Between £100,000 and £125,140 you lose your personal allowance, which pushes the real tax rate to 62% in England and 69.5% in Scotland. Here's how it works and what you can do about it.

By Stuart Mathieson · 2 November 2026 · 6 min read

Nobody publishes a 60% income tax rate. But if you earn between £100,000 and £125,140, that's what you pay on every extra pound in England, Wales and Northern Ireland. In Scotland it's 67.5%. Add National Insurance and it's 62% and 69.5%.

This is the pay range where the take-home pay calculator gives answers that look wrong the first time you see them. They aren't. This guide uses the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027.

Where the trap comes from

Almost everyone gets a tax-free personal allowance of £12,570. Once your income goes over £100,000, you lose £1 of that allowance for every £2 you earn above the line. By £125,140 it's gone completely.

So each extra £2 you earn does two things at once:

• the £2 itself is taxed at your normal top rate, and
• £1 that used to be tax-free now gets taxed too.

In England that's 40% on £2 plus 40% on £1 - £1.20 of tax on £2 of pay, or 60%. In Scotland the band between £75,001 and £125,140 is the 45% advanced rate, so it's 45% on £2 plus 45% on £1, or 67.5%.

National Insurance adds another 2% on earnings over £50,270, wherever you live.

A worked example: a £10,000 pay rise

Take someone earning £100,000 who gets a raise to £110,000. Their personal allowance falls from £12,570 to £7,570.

If you also repay a Plan 2 student loan, 9% comes off the top as well. The same rise then leaves you £2,900 in England and £2,150 in Scotland - barely a fifth of the raise in Scotland.

Across the whole trap, from £100,000 to £125,140, a Scottish taxpayer keeps £7,668 of £25,140 more pay. In England it's £9,553.

Once you're past £125,140

Above £125,140 there's no allowance left to lose, so the rate drops back down. The additional rate in England, Wales and Northern Ireland is 45%, and Scotland's top rate is 48%. Both are lower than the rate in the trap below them, which is one of the odder features of the UK tax system.

It's about "adjusted net income", not salary

The taper is based on your adjusted net income, not your salary. That distinction is the whole reason the trap can be escaped. HMRC works it out like this:

1. Start with all your taxable income - salary, bonus, self-employed profit, rental profit, savings interest, dividends.
2. Take off pension contributions paid without tax relief at source, and trading losses.
3. Take off Gift Aid donations, grossed up: each £1 you give reduces your income by £1.25.
4. Take off pension contributions where your provider has already added basic-rate relief, also grossed up: £1 paid in reduces your income by £1.25.

So two things bring your adjusted net income down: pension contributions and charitable giving.

Pension contributions: getting 60% or more back

Paying into a pension in the trap gets you relief at an unusually high rate. Back to the person on £110,000, who puts £10,000 into their pension:

With salary sacrifice, £10,000 goes into the pension and take-home pay falls by only £3,800 in England or £3,050 in Scotland. Their adjusted net income drops back to £100,000, so the full personal allowance returns. Salary sacrifice comes out slightly ahead because it saves the 2% National Insurance too.

With relief at source, you pay £8,000 and the provider claims £2,000 from HMRC. You then claim the rest through your Self Assessment return or by asking HMRC to adjust your tax code. If you never claim it, you lose a large part of the benefit - and it's easy to miss.

I go through the three pension methods properly in the salary sacrifice guide.

One thing to keep in mind: pension money is locked away until your late 50s. From 6 April 2028 the minimum age to take it rises from 55 to 57. If you need the money sooner, a pension isn't the right home for all of it, however good the tax relief.

Gift Aid

If you give to charity, Gift Aid works the same way. Giving £8,000 under Gift Aid counts as £10,000 grossed up, so it reduces your adjusted net income by £10,000. The charity claims the basic-rate tax, and you claim the rest back through Self Assessment. Someone in the trap can end up with most of the gift paid for by the tax saving. That's a nice side effect if you were going to give anyway, but it's rarely a reason to give in itself.

The cliff edges sitting at £100,000

The taper is gradual. Some things that switch off at £100,000 aren't.

Childcare. You can't get Tax-Free Childcare - worth up to £2,000 a year per child, or £4,000 if your child is disabled - if you or your partner expect adjusted net income over £100,000 in the tax year. In England, the free childcare hours for working parents use the same £100,000 limit. Earning £100,001 instead of £99,999 can cost a family with two young children thousands of pounds.

Scotland's funded early learning and childcare - up to 1,140 hours a year for 3 to 5 year olds - is a separate scheme. Tax-Free Childcare applies across the whole UK, though.

Child Benefit. The High Income Child Benefit Charge starts lower, at £60,000 of adjusted net income, and takes back 1% of your Child Benefit for each £200 above that. By £80,000 it's all repaid. It's a separate taper, but the same pension and Gift Aid tricks reduce it.

What I'd check if I were near £100,000

• Work out your adjusted net income, not just your salary. A bonus, rental profit or a good year for savings interest can tip you over without a pay rise.
• Look at salary sacrifice first. If your employer offers it, it's usually the cheapest way back under £100,000. Some employers also pass on part of their own National Insurance saving.
• If your pension uses relief at source, claim the extra relief. It won't happen automatically.
• Mind the timing. The taper uses a whole tax year's income. Contributions made before 5 April count for that year.
• Consider whether the money should be locked away. Saving 60% to 69.5% is a great deal, but only if you're happy not to touch the money for decades.

This is the kind of decision where an hour with a qualified financial adviser can pay for itself, especially with a bonus, share options or childcare in the mix. The take-home pay calculator will show you the effect of a pension contribution at your salary, in Scotland or the rest of the UK, before you speak to anyone.

Written by Stuart Mathieson

I'm a freelance web developer based in Scotland, and I build and maintain every calculator on this site myself. I check the figures in these guides against HMRC, the IRS and the other official sources listed below, but I'm not a tax adviser - for decisions that matter, talk to one. More about me.