What is the 60% tax trap?

Between £100,000 and £125,140 of adjusted net income, you lose £1 of your £12,570 personal allowance for every £2 you earn. Combined with 40% higher-rate tax, each extra £1 in that band costs 60p in income tax, plus 2p National Insurance.

How do I avoid the £100k tax trap?

Reduce your adjusted net income below £100,000, usually with pension contributions (salary sacrifice or personal contributions) or Gift Aid donations. Every £1 contributed in the band saves around 60p of tax.

Is the £100k threshold going up?

No. The £100,000 limit and the other income tax thresholds are frozen until April 2031, so more people are pulled into the trap each year as pay rises.

Does the trap affect childcare?

Yes. If either parent's adjusted net income is over £100,000, the family loses Tax-Free Childcare and, in England, funded childcare hours.

The £100k tax trap: why you pay 60% between £100,000 and £125,140

Figures for England, Wales and Northern Ireland, checked against gov.uk on 27 October 2026. General information, not personal advice.

The UK's official tax rates are 20%, 40% and 45%. But if you earn between £100,000 and £125,140, the rate you actually pay on that slice is 60%. With the thresholds frozen until April 2031, more London salaries land in it every year.

How the trap works

Everyone gets a £12,570 personal allowance, until their adjusted net income passes £100,000. Then the allowance shrinks by £1 for every £2 over, and it's gone completely at £125,140. So each extra £2 you earn costs 40% tax on the £2 itself, plus 40% tax on the £1 of allowance you've lost: £1.20 on £2, or 60%. National Insurance adds another 2%.

A worked example

Income	Personal allowance	Income tax
£100,000	£12,570	£27,432
£110,000	£7,570	£33,432
£125,140	£0	£42,516

Going from £100,000 to £110,000 adds £6,000 of income tax on £10,000 of pay. The same £10,000 put into your pension instead would have cost you only £4,000 (or £3,800 through salary sacrifice, which also saves 2% National Insurance).

How to get out of it

Salary sacrifice into your pension. The simplest route if your employer offers it: your taxable pay falls directly. From April 2029 the National Insurance saving is capped at £2,000 sacrificed a year, but the income tax saving isn't.
Personal pension contributions. Pay in, and the gross amount reduces your adjusted net income. You claim the extra relief, and your allowance back, through Self Assessment.
Gift Aid. Donations reduce adjusted net income in the same way.
Timing a bonus. If your employer lets you sacrifice a bonus into your pension, that's often the cleanest way to stay under £100,000.

You can put up to £60,000 a year into pensions, plus unused allowance from the previous three years. If your income is well above £260,000 the allowance tapers, so take advice.

The childcare cliff edge

Over £100,000 of adjusted net income, the family loses Tax-Free Childcare (up to £2,000 a child a year) and, in England, funded childcare hours, worth far more for under-threes. Unlike the tax trap this is a cliff, not a slope: £1 over loses all of it. Pension contributions that bring you under £100,000 keep it.

If you're new to the UK

If you moved to the UK in the last four tax years and hadn't lived here for the ten years before, you may be able to leave out of UK tax the pay for days you worked outside the UK. Claiming means giving up your personal allowance for the year, which at over £125,140 you've already lost, so the relief is pure saving. Between £100,000 and £125,140 it depends on your days abroad: the free check works it out.

Worked any days outside the UK since you moved here?

If you moved to the UK in the last few years and travel for work, or work from home while visiting family, part of your pay may not be taxable in the UK. The free check tells you in two minutes whether it's worth claiming.

Do the free check

More ways to cut your bill: how to pay less tax in London.