GBP 99k vs GBP 101k: Why Crossing GBP 100,000 Can Leave You Worse Off in 2026/27

A pay rise that lifts you over GBP 100,000 sounds like an unambiguous win. In 2026/27 it is one of the few points in the tax system where earning more can leave you barely better off, and occasionally feel worse once benefits in kind are stripped away. Here is the GBP 99,000 versus GBP 101,000 comparison.

The taper that creates the trap

Above GBP 100,000 your GBP 12,570 Personal Allowance tapers at GBP 1 for every GBP 2 of income. It is fully gone by GBP 125,140. The practical effect is that each extra GBP 2 of income is taxed on GBP 3: the GBP 2 itself plus GBP 1 of allowance that becomes taxable. That produces a 60% effective marginal rate before National Insurance.

Take-home at GBP 99,000

At GBP 99,000 you keep your full Personal Allowance. In England, Wales and Northern Ireland:

• Personal Allowance: GBP 12,570 taxed at 0%
• Basic rate: 20% on GBP 37,700 = GBP 7,540
• Higher rate: 40% on GBP 48,730 (GBP 99,000 minus GBP 50,270) = GBP 19,492
• National Insurance: 8% on GBP 37,700 plus 2% on GBP 48,730 = GBP 3,016 plus GBP 974.60 = about GBP 3,991
• Total deductions: about GBP 31,023
• Take-home: roughly GBP 67,980 a year

Take-home at GBP 101,000

At GBP 101,000 you are GBP 1,000 over the threshold, so you lose GBP 500 of Personal Allowance. That GBP 500 now becomes taxable at 40%, on top of the 40% on the extra salary itself.

• The extra GBP 2,000 of gross is taxed at 40% = GBP 800
• The GBP 1,000 of lost allowance is taxed at 40% = GBP 400
• National Insurance on the extra GBP 2,000 at 2% = GBP 40
• Total extra deductions on the GBP 2,000 raise: about GBP 1,240
• Take-home on GBP 101,000: roughly GBP 68,740

The result: a GBP 2,000 raise nets about GBP 760

So moving from GBP 99,000 to GBP 101,000, a GBP 2,000 headline rise, lifts your take-home by only around GBP 760. You keep just 38p in the pound on that slice. If the raise also nudges you over thresholds for things like Tax-Free Childcare, the net effect can be negative.

The pension fix

The clean answer is to redirect the income above GBP 100,000 into a pension. A contribution reduces your adjusted net income, and a contribution that brings you back to GBP 100,000:

• Restores the full Personal Allowance
• Earns relief at the 60% effective rate on that slice
• Avoids any benefit cliffs tied to the GBP 100,000 line
• Grows your retirement pot with the full gross amount

Quick takeaways

• The 60% trap runs from GBP 100,000 to GBP 125,140 as the allowance tapers
• A GBP 2,000 raise above GBP 100,000 may net only about GBP 760
• Pension contributions are the standard tool to escape it
• Salary sacrifice adds a National Insurance saving on top
• Tax-Free Childcare and funded hours vanish at GBP 100,000, sharpening the cliff

Crossing GBP 100,000 is the one milestone where the marginal maths matters more than the headline. Model both sides with the CalcHub salary and pension calculators, and confirm the taper rules on gov.uk.