The £100,000 Tax Trap: Why You Pay 60% Tax and How to Escape It
19 October 2026
Earning between £100,000 and £125,140 puts you in the 100k tax trap: a quirk of the UK tax system where your marginal income tax rate jumps to 60%. It happens because your £12,570 personal allowance is gradually withdrawn once your income passes £100,000, dragging you into the 100k tax trap. This guide explains exactly how the 60% rate works in the 2026/27 tax year, shows the numbers with worked examples, and covers the legal ways to reduce it.
What is the 100k tax trap?
The 100k tax trap is the nickname for the effective 60% marginal income tax rate that applies to earnings between £100,000 and £125,140. It is not an official HMRC tax band. Instead, it is the combined effect of two rules working together:
- You pay 40% higher-rate income tax on earnings above £50,270.
- Your tax-free personal allowance (£12,570) is reduced by £1 for every £2 you earn above £100,000.
Because the lost allowance becomes taxable at 40%, each extra £1 you earn in this zone costs you 40p of income tax plus 20p from the withdrawn allowance. That is a 60% marginal rate, the highest marginal income tax rate in the UK system for most earners.
How the 60% marginal rate works
Here is how marginal income tax rates stack up across the earnings bands in 2026/27:
Notice that the 60% zone is steeper than the 45% additional rate above it. Someone earning £110,000 faces a higher marginal rate on their next pound than someone earning £200,000. That is why the 100k tax trap catches so many people by surprise.
The personal allowance taper in numbers
The mechanism behind the trap is the personal allowance taper. For every £2 of adjusted net income above £100,000, you lose £1 of personal allowance. The full £12,570 allowance is gone once income reaches £125,140 (£100,000 plus twice £12,570).
| Adjusted net income | Personal allowance left | Allowance lost |
|---|---|---|
| £100,000 | £12,570 | £0 |
| £105,000 | £10,070 | £2,500 |
| £110,000 | £7,570 | £5,000 |
| £115,000 | £5,070 | £7,500 |
| £120,000 | £2,570 | £10,000 |
| £125,140 | £0 | £12,570 |
The taper uses adjusted net income, which is your total taxable income minus certain reliefs such as pension contributions and Gift Aid donations. That detail matters, because it is also the key to escaping the trap, as explained below.
Worked example: £110,000 salary in 2026/27
Here is the income tax calculation for a £110,000 salary with no pension contributions:
- Allowance lost: (£110,000 minus £100,000) divided by 2 = £5,000, so the allowance is £12,570 minus £5,000 = £7,570.
- Taxable income: £110,000 minus £7,570 = £102,430.
- Basic rate (20%): £37,700 taxed = £7,540.
- Higher rate (40%): £102,430 minus £37,700 = £64,730 taxed = £25,892.
- Total income tax: £7,540 plus £25,892 = £33,432.
Want your own numbers? Use our income tax calculator or the full salary calculator to see your take-home pay for 2026/27.
How to avoid the 60% trap legally
You cannot opt out of the taper, but you can reduce your adjusted net income so less of your pay falls inside the 100k tax trap zone:
1. Increase pension contributions
Pension contributions reduce your adjusted net income pound for pound. Contributing £10,000 into your pension when you earn £110,000 brings your adjusted net income to £100,000, restoring your full personal allowance and avoiding the 60% zone entirely. Salary sacrifice arrangements are especially efficient because they also save National Insurance. Try our pension contribution calculator to model it.
2. Use salary sacrifice benefits
Exchanging salary for benefits such as additional pension contributions, cycle-to-work schemes or electric cars through salary sacrifice lowers your taxable pay and therefore your adjusted net income.
3. Gift Aid donations
Charitable donations under Gift Aid extend your basic-rate band and reduce adjusted net income, which can pull you back below £100,000.
4. Time your income
If you receive bonuses or dividends, spreading them across tax years can keep you out of the trap zone in any single year. This needs planning before the tax year ends on 5 April.
Does the 100k tax trap affect National Insurance?
Employee National Insurance does not have a 60% trap. In 2026/27 you pay 8% on earnings between £12,570 and £50,270 and 2% above that. However, combined with the 60% income tax rate, your total marginal deduction inside the 100k tax trap zone is around 62%, which makes pension contributions in this zone exceptionally good value.
100k tax trap FAQs
At what salary does the 60% tax rate start?
The effective 60% marginal rate starts when your adjusted net income exceeds £100,000 and continues until £125,140, when the personal allowance is fully withdrawn.
Is the 100k tax trap a real HMRC tax band?
No. HMRC does not list a 60% band. It is the mathematical result of 40% higher-rate tax plus the 40% tax on the withdrawn personal allowance (£1 of allowance lost per £2 earned).
Will the 100k threshold change in 2026/27?
The £100,000 taper threshold and £12,570 personal allowance remain frozen in 2026/27. Fiscal drag means more earners are caught by the 100k tax trap each year. GOV.UK publishes the official income tax rates and allowances.
Do pension contributions really avoid the 100k tax trap?
Yes. Pension contributions reduce your adjusted net income, which is the figure the £100,000 taper test uses. Salary sacrifice pension contributions are the most common way higher earners stay below the threshold.