Answers · UK 2025/26

Why do I lose my Personal Allowance over GBP 100,000 and what is the 60% trap?

Above GBP 100,000 of income your GBP 12,570 Personal Allowance is cut by GBP 1 for every GBP 2 earned, disappearing entirely at GBP 125,140. This creates a 60% effective tax rate on income between GBP 100,000 and GBP 125,140, because each extra pound is taxed and also loses allowance.

Last updated: 10 June 2026Last reviewed: 10 June 2026How we verify

Full answer

In 2026/27 the GBP 12,570 Personal Allowance is tapered for high earners: for every GBP 2 of adjusted net income above GBP 100,000, you lose GBP 1 of allowance. By GBP 125,140 the allowance is gone entirely. Because losing allowance means more of your income becomes taxable at 40%, the effective marginal rate in this band is about 60%, often called the 60% tax trap. Worked example: Lauren earns GBP 110,000. She is GBP 10,000 over GBP 100,000, so she loses GBP 5,000 of Personal Allowance (GBP 1 for every GBP 2), leaving GBP 7,570. That GBP 5,000 of lost allowance is now taxed at 40% (GBP 2,000) on top of the 40% already due on the GBP 10,000 itself (GBP 4,000). So GBP 10,000 of extra income generates GBP 6,000 of tax, a 60% effective rate. The most effective way to escape the trap is a pension contribution, which reduces adjusted net income. If Lauren paid GBP 10,000 (gross) into her pension, her adjusted net income falls back to GBP 100,000, restoring her full GBP 12,570 allowance and avoiding the 60% band. The pension annual allowance is GBP 60,000, so there is usually ample room. Gift Aid donations work similarly. Use the income-tax calculator to see the taper applied to your income, and the pension calculator to model how contributions claw back the allowance. For the precise definition of adjusted net income, see gov.uk.