What happens above £100,000
Your Personal Allowance of £12,570 is tax-free. Once your adjusted net income passes £100,000, you lose £1 of that allowance for every £2 you earn, until it is gone at £125,140 (GOV.UK).
So each extra £1 in that range is taxed at 40%, and also makes another 50p of your income taxable at 40%: 60% in total, plus 2% National Insurance. Going from £100,000 to £125,140 adds £25,140 to your salary and £9,553 to your take-home.
A £10,000 pay rise from £100,000
Say your salary goes from £100,000 to £110,000. Your Personal Allowance drops from £12,570 to £7,570, so income tax rises from £27,432 to £33,432 and National Insurance by £200.
Take-home goes from £68,557 to £72,357: the £10,000 rise is worth £3,800 to you. Above £125,140 the allowance is already gone and the rate settles at 45% plus 2% NI, so you keep 53% of each extra pound: more than inside the trap.
What you keep, salary by salary
| Salary | Personal Allowance left | Income tax | Take-home | Kept of the next £1,000 |
|---|---|---|---|---|
| £95,000 | £12,570 | £25,432 | £65,657 | 58% |
| £100,000 | £12,570 | £27,432 | £68,557 | 38% |
| £105,000 | £10,070 | £30,432 | £70,457 | 38% |
| £110,000 | £7,570 | £33,432 | £72,357 | 38% |
| £115,000 | £5,070 | £36,432 | £74,257 | 38% |
| £120,000 | £2,570 | £39,432 | £76,157 | 38% |
| £125,140 | £0 | £42,516 | £78,111 | 53% |
| £130,000 | £0 | £44,703 | £80,686 | 53% |
How to get out of it
Adjusted net income is measured after pension contributions. Salary sacrifice, a net pay pension or relief-at-source contributions all bring it down. On £110,000, sacrificing £10,000 into your pension takes adjusted net income to £100,000 and restores the full allowance.
Your pension gets the full £10,000. Your take-home falls by only £3,800, from £72,357 to £68,557. Put another way, £6,200 of that £10,000 would otherwise have gone in tax and NI.
- Salary sacrifice also saves 2% NI; a net pay arrangement saves income tax only; relief at source saves the same income tax, partly through your tax return.
- Pension contributions are limited by the annual allowance (see GOV.UK), which this calculator does not check.
- Child Benefit is cut back from £60,000 and gone by £80,000 of adjusted net income, so the same contributions can also save the High Income Child Benefit Charge. Add your children in the calculator to see it.
Questions people ask
Is the 60% rate real?
Yes. It is not a separate band but the effect of losing the Personal Allowance. At £110,000 you keep 38% of each extra pound.
Does a bonus count?
Yes. Adjusted net income includes bonuses, so a bonus that takes you over £100,000 is caught. Some employers let you sacrifice a bonus into your pension.
Does Scotland have the same trap?
Yes: the Personal Allowance is a UK rule, so it tapers the same way, and Scottish rates in that range are 45%, so the effective rate is 67.5% plus 2% NI.