Glossary · UK
What is Personal Allowance Taper?
The reduction of the £12,570 Personal Allowance by £1 for every £2 of adjusted net income above £100,000, creating an effective 60% marginal tax rate between £100,000 and £125,140.
Full Definition
The Personal Allowance Taper gradually withdraws the tax-free Personal Allowance from higher earners: for every £2 of adjusted net income above £100,000, £1 of the £12,570 Personal Allowance is removed, so the allowance reaches zero once adjusted net income hits £125,140. Because the withdrawn allowance becomes taxable at 40%, on top of the 40% higher rate already due on income in that band, earners between £100,000 and £125,140 face an effective marginal tax rate of 60% on each additional pound earned — higher than the top additional rate of 45% charged on income above £125,140. Many people in this band reduce their adjusted net income below £100,000 through pension contributions or Gift Aid donations, both of which come off adjusted net income and can restore some or all of the allowance, making pension contributions particularly tax-efficient in this specific income range.
How Personal Allowance Taper is calculated
Reduced PA = max(0, 12570 - (Adjusted net income - 100000) / 2)- 12570
- Standard Personal Allowance for 2026/27 (GBP).
- 100000
- Adjusted net income threshold above which the taper begins (GBP).
Worked example: At GBP 130,000 of adjusted net income the taper has removed the full GBP 12,570 allowance (since 130,000 exceeds 125,140), so all income is taxed with no tax-free allowance at all.