The £100k tax trap.
Tax year 2026/27 · figures computed by our verified engine
The UK’s highest effective tax rate is not the 45% additional rate. It is the strip between £100,000 and £125,140, where every £2 you earn removes £1 of your personal allowance. You pay 40% on the new pound and lose 40% on the pound of allowance that just vanished: a 60% effective income-tax rate, 62% with National Insurance, and more still with a student loan.
A £10,000 rise that keeps £3,800
Computed for 2026/27: on £100,000 you take home £68,557; on £110,000 it is £72,357. The £10,000 rise keeps just £3,800, because your allowance fell from £12,570 to £7,570 on the way. You can see the spike on the rate curve and pin your own salary to it.
The childcare cliff on top
The taper is gradual; childcare is not. Once either parent’s adjusted net income passes £100,000, eligibility for tax-free childcare and the funded childcare hours goes entirely, per GOV.UK’s rules. For a family using them, crossing £100,000 by a single pound can cost thousands a year, which makes the effective rate at the boundary itself far higher than 62%.
Adjusted net income is the number that counts
The taper runs on adjusted net income: broadly your total income minus pension contributions (grossed up for relief-at-source schemes) and Gift Aid. That definition is the escape route: money you put in a pension does not just avoid tax itself, it pulls your adjusted net income back down and restores allowance at the same time.
The pension unwind, computed
Same £110,000, but with £10,000 going into a pension by salary sacrifice: adjusted net income returns to £100,000, the full allowance comes back, and take-home is £68,557 instead of £72,357. The pension pot gains £10,000 while take-home falls by only £3,800: the taper working in reverse. Try your own numbers with the calculator. Locking money into a pension until at least your late 50s is a real trade-off, so treat this as arithmetic, not advice.
Above £125,140 the trap ends
Once the allowance is fully gone the marginal rate actually fallsto 47% (45% additional rate plus 2% NI). The system’s strangest property: earning £126,000 faces a lower marginal rate than earning £115,000. Every salary page between £100,000 and £126,000 shows exactly where you sit in it.