UK PAY GUIDE · 2026/27
The £100k tax trap explained
Once adjusted net income exceeds £100,000, the Personal Allowance is reduced by £1 for every £2 of excess income. This can create a high effective marginal tax rate before the allowance is fully withdrawn.
What it means
Use the calculator to compare take-home pay at different salaries and pension contribution levels. Salary sacrifice can affect adjusted income, but individual circumstances matter and regulated advice may be appropriate.
Run your own numbers
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Frequently asked questions
What is the £100k tax trap?
Once your adjusted net income goes over £100,000, your Personal Allowance is reduced by £1 for every £2 earned above that threshold, until it reaches zero at £125,140. This creates a higher effective marginal tax rate across that income band.
How can pension contributions help?
Pension contributions (including salary sacrifice) can reduce your adjusted net income, which may help preserve some or all of your Personal Allowance. The right approach depends on your individual circumstances.
Does this apply to bonuses too?
Yes. Bonuses count towards adjusted net income in the year they're paid, so a large bonus can push you into the tapered allowance band even if your base salary is below £100,000.
Should I get financial advice?
Because individual circumstances vary and the rules can be complex, speaking to a regulated financial adviser is often worthwhile if you're affected by the tapering. See our note on comparing advisers above.
Important
These tools provide illustrative estimates and are not tax, legal or financial advice. Actual payroll treatment depends on individual circumstances.