Answers · UK 2025/26

What is the £100k Personal Allowance taper?

Earn over £100,000 and HMRC withdraws £1 of your £12,570 Personal Allowance for every £2 of extra income. By £125,140 the allowance is gone. That creates a 60% effective marginal rate between £100,000 and £125,140 — known as the "60% tax trap".

Last updated: 16 May 2026Last reviewed: 16 May 2026How we verify

Full answer

For 2025/26 the £12,570 Personal Allowance starts tapering once adjusted net income passes £100,000. The taper is £1 lost for every £2 over, so by £125,140 the allowance is zero. Inside that £25,140 band, every extra £1 of earnings is taxed at 40% (£0.40) and also exposes £0.50 of allowance to 40% tax (another £0.20), giving a 60% effective rate — 62% once you add 2% NI. Worked example: a £110,000 earner has only £7,570 of Personal Allowance (£12,570 − £5,000). A £1,000 pay rise costs £620 in tax and NI. The most efficient response is pension contribution. Sacrificing or grossing up £10,000 into a pension reduces adjusted net income from £110,000 to £100,000, restoring the full allowance and saving roughly £6,000 of income tax plus NI — a real cost of about £4,000 for £10,000 in pension. Charitable donations under Gift Aid and certain salary-sacrifice schemes (cycle, EV cars) work similarly. Note: bonuses, rental profits, interest above the PSA and dividends all count toward adjusted net income, so monitor the threshold throughout the year.