The £100k Personal Allowance Tax Trap
Earn between £100,000 and £125,140 and you face an effective 60% tax rate as your personal allowance is clawed back. Find out how it affects you, and what to do about it.
Use the CalculatorFind out exactly where you stand
Enter your income details below and the calculator will instantly show you:
- Your adjusted net income and whether you are caught in the 60% trap
- Your effective marginal tax rate on each extra pound you earn
- Exactly how much personal allowance you have left
- Your estimated income tax, National Insurance, and take-home pay
- How much you would need to contribute to a pension to escape the trap entirely
- The childcare entitlements you may be losing if you have young children
All calculations use 2025/26 tax rates for England, Wales, and Northern Ireland. No data is stored or shared.
Receiving any NI credits? (select all that apply)
Receiving any NI credits? (select all that apply)
Frequently Asked Questions
Everything you need to know about the £100k tax trap
The £100k tax trap, sometimes called the 60% tax trap, is a quirk of the UK tax system that creates an effective marginal income tax rate of 60% for people earning between £100,000 and £125,140.
It happens because the UK's £12,570 personal allowance (the amount you can earn before paying any income tax) is gradually withdrawn once your income exceeds £100,000. For every £2 you earn above £100,000, you lose £1 of your personal allowance. By the time your income reaches £125,140, your personal allowance has been reduced to zero entirely.
This withdrawal of the personal allowance is stacked on top of the 40% higher-rate tax you are already paying on those earnings, creating an effective rate of 60p in every £1, without any formal tax band ever being labelled "60%".
If your adjusted net income falls between £100,000 and £125,140, you are caught in the trap. Here is the maths in plain terms:
- You are already paying 40% higher-rate tax on income above £50,270, so 40p goes on every extra £1 you earn.
- Because you earn £10,000 above £100,000, your personal allowance is reduced by £5,000 (£1 lost for every £2 earned over £100k).
- That £5,000 of previously tax-free allowance now becomes taxable at 40%, costing you an extra £2,000 in tax.
- Spread across the £10,000 of extra earnings: £4,000 (40%) + £2,000 (allowance clawback) = £6,000 tax on £10,000 earned = 60%.
This can even catch people whose base salary sits just below £100,000 but who receive a bonus, commission, or one-off payment that tips them over the threshold, even temporarily within a single tax year.
The trap is triggered by your adjusted net income (ANI), which is neither your raw gross salary nor your take-home pay, but a specific HMRC calculation that sits somewhere in between.
HMRC defines adjusted net income as your total taxable income (from all sources) minus certain allowable deductions:
- Pension contributions: payments into a pension scheme that receives tax relief, either via Relief at Source (grossed up) or salary sacrifice (deducted before your P60 figure)
- Gift Aid donations: charitable donations made through Gift Aid, also grossed up by HMRC
- Trading losses: if applicable
- Other qualifying deductions as permitted by HMRC
This distinction is important and works in your favour: it means you can actively reduce your adjusted net income, and therefore escape or reduce the trap, by making additional pension contributions or Gift Aid donations, without actually reducing your gross salary.
No, and this is often the hidden sting that makes the trap even more painful for families. Once either parent's adjusted net income exceeds £100,000, your household loses eligibility for all government-funded childcare support:
Critically, only one parent needs to breach the £100,000 threshold for the entire household to lose these entitlements, even if the other parent earns nothing or earns well below the threshold.
For a family with two young children, losing Tax-Free Childcare alone could cost £4,000 per year. Combined with the 60% tax hit on the income that pushed you over, the real effective cost of earning slightly above £100,000 can be extraordinary, making a strong case for reducing your adjusted net income back below the threshold.
The most effective strategies all work by reducing your adjusted net income below £100,000, so you keep your earnings but recover your personal allowance, your childcare entitlements, and avoid the 60% marginal rate.
The most popular and tax-efficient method. Contributions to a pension reduce your adjusted net income pound-for-pound. Inside the trap you receive 40% tax relief, effectively meaning the government funds 40% of your pension contribution. You can contribute via Relief at Source (after-tax payments topped up by HMRC) or salary sacrifice (pre-tax, also saving NI). The annual allowance is currently £60,000, and you can carry forward unused allowance from the three prior tax years.
Donations to charity through Gift Aid are grossed up by HMRC, extending your basic rate band and reducing your adjusted net income. A £1,000 cash donation becomes a £1,250 grossed-up deduction. This is a useful strategy if you already make regular charitable donations, though it requires you to give money away rather than retain it.
If your employer offers salary sacrifice arrangements (for electric cars, cycle-to-work, gym membership, private health insurance, or additional pension) participating reduces your gross salary before it hits your P60. This lowers both your adjusted net income and your National Insurance bill, making it particularly efficient for employees near the threshold.
If a bonus or one-off payment is pushing you over £100,000, ask your employer whether it can be paid across two tax years, splitting it between March and April for example. Spreading the income means neither year's adjusted net income necessarily breaches the threshold, avoiding the trap entirely without any permanent financial commitment.