Answers · UK 2025/26
What is adjusted net income UK?
Adjusted net income is your total income minus reliefs such as pension contributions, Gift Aid donations and trading losses. HMRC uses it to calculate several threshold-based charges and allowances — including Child Benefit clawback (above £60,000), Personal Allowance taper (above £100,000) and Annual Allowance taper for pensions (above £260,000).
Full answer
Adjusted net income = total gross income − Gift Aid donations (grossed up) − personal pension contributions (grossed up) − employer pension contributions made via salary sacrifice (these reduce gross pay) − trading losses brought forward − property losses. Key uses: (1) HICBC: if adjusted net income exceeds £60,000, Child Benefit is clawed back at 1% per £200; (2) Personal Allowance taper: above £100,000, PA reduces by £1 per £2 — creating the 60% tax trap; (3) Pension tapered AA: above £260,000 adjusted income (combined with threshold income above £200,000) the £60,000 Annual Allowance tapers down to a minimum £10,000; (4) Marriage Allowance: transfer only available if recipient is a basic-rate taxpayer (adjusted net income ≤ £50,270). Strategy: reducing adjusted net income through pension contributions or charitable giving is one of the most tax-efficient actions available to UK earners near a threshold.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.