Key takeaways
- Above £100,000 you lose £1 of personal allowance for every £2 you earn, so each extra pound inside the trap is taxed at an effective 60% — 71% with a Plan 2 student loan.
- A £10,000 rise from £100,000 to £110,000 adds only £3,800 a year to take-home pay, against £5,800 for the same rise just below the line.
- The allowance is fully gone by £125,140, and above that the marginal rate falls to 47%.
- A pension contribution reduces the pay your income tax is worked out on, which is why the trap is discussed so much in pension planning.
Above £100,000 you lose £1 of personal allowance for every £2 you earn, so each extra pound is taxed at an effective 60% — and with a Plan 2 student loan, 71%.
There is no 60% tax band in the UK. If you open the official rates you will find 20%, 40% and 45%, and nothing else. And yet, between £100,000 and £125,140, a basic-rate-looking pay rise can be taxed at 60% — and with a student loan, at 71%. This is the £100,000 tax trap, and it is not a trick of the rates. It is a trick of the personal allowance, which starts to disappear the moment your income crosses £100,000. This article shows you exactly how it works, what it costs at every salary in the trap, and what people actually do about it.
See it on your own salary
Enter a salary above £100,000 and watch the warning appear, with your marginal rate shown. The UK tax rates 2026/27 page has every band and threshold behind the figures below.
How the trap works
The personal allowance — the £12,570 of income you can earn tax-free — is not fixed. Above £100,000 of income it is tapered away: you lose £1 of allowance for every £2 you earn over £100,000. At £110,000 you have lost £5,000 of allowance, so it is £7,570. At £120,000 you have lost £10,000, so it is £2,570. At £125,140 you have lost all of it, so it is £0. Above £125,140 there is nothing left to lose, and the trap ends — which is the trap's one mercy, and also its absurdity: the marginal rate falls once you are rich enough.
Losing the allowance is what creates the 60%. Take £2 of extra pay inside the trap. The £2 itself is taxed at the 40% higher rate, which is 80p. But that £2 of extra pay also costs you £1 of allowance, and that £1 of allowance was sheltering £1 of your existing pay from tax — so you lose another 40p of tax on money you already had. That is £1.20 of tax on £2 of extra pay: 60%. The straightforward check is the calculator's own arithmetic, because the straightforward way is checkable.
At £100,000, your income tax is £27,432.00. At £110,000, it is £33,432.00. That is £6,000 of extra tax on £10,000 of extra pay — 60% — before National Insurance or student loan. The £6,000 is made of two parts: £4,000 of tax on the extra £10,000 at the 40% higher rate, plus £2,000 of tax on the £5,000 of allowance you lost, also at 40%. Sixty pence in the pound, on money that was never in a 60% band. That is the trap, and there is no way to see it from the rate table alone — you only see it by comparing two salaries, which is exactly what the salary calculator does.
What it costs at every salary in the trap
| Salary | Personal allowance | Income tax | National Insurance | Take-home / year |
|---|---|---|---|---|
| £90,000 | £12,570 | £23,432.00 | £3,810.60 | £62,757.40 |
| £100,000 | £12,570 | £27,432.00 | £4,010.60 | £68,557.40 |
| £110,000 | £7,570 | £33,432.00 | £4,210.60 | £72,357.40 |
| £120,000 | £2,570 | £39,432.00 | £4,410.60 | £76,157.40 |
| £125,140 | £0 | £42,516.00 | £4,513.40 | £78,110.60 |
All rows use tax code 1257L, no pension, no student loan. Read the take-home column like a story. A £10,000 rise from £90,000 to £100,000 adds £5,800.00 a year to your take-home pay — you keep 58% of it, which is the 40% higher rate plus 2% National Insurance doing their normal work. A £10,000 rise from £100,000 to £110,000 adds only £3,800.00 — you keep 38%. The same rise, the same rate table, £2,000 a year less in your pocket, purely because the second rise crosses the line where the allowance starts to go.
The trap is widest in the middle. At £120,000 your allowance is down to £2,570 and your income tax is £39,432.00 — nearly a third of your salary. At £125,140 the allowance is gone entirely, income tax is £42,516.00, and take-home pay is £78,110.60 a year. And then the marginal rate falls: above £125,140 you are taxed at 45% plus 2% National Insurance, which is 47% — lower than the 62% marginal rate inside the trap (60% income tax plus 2% National Insurance). The system taxes the person on £110,000 more heavily on their next pound than the person on £130,000. That is not a design choice anyone would defend; it is what happens when a taper meets a band edge.
Add a student loan and it gets worse
Student loan repayments stack on top of the trap, because the loan is charged on your pay above its threshold and the trap does not change the threshold. On a £110,000 salary with a Plan 2 loan, the loan is 9% of £110,000 minus the £29,385 threshold — £80,615 at 9%, which is £7,255.35 a year. Income tax is £33,432.00, National Insurance is £4,210.60, and take-home pay is £65,102.05 a year. The marginal rate on the next pound at that salary is 71%: 40% income tax, 20% from the allowance taper, 2% National Insurance, and 9% student loan.
That is the figure to hold in mind when a pay rise, a bonus, or overtime is offered in this range — not because you should refuse the money, because £290 kept is still £290 — but because the decision changes. A £5,000 bonus that looks like £416 a month gross is £1,450 a year, about £120.83 a month, after the trap and the loan. A salary sacrifice arrangement that looks like a small pension top-up is suddenly worth a second look, because every pound sacrificed avoids the 60% or 71% rate rather than the 42% rate it would avoid lower down the scale.
Seventy-one pence in the pound. For every £1,000 of extra pay inside the trap, a Plan 2 borrower keeps £290.
The same logic applies to the £100,000 line itself. At exactly £100,000 your allowance is still the full £12,570 — the taper starts on the pound above. At £100,002 it has already fallen to £12,569. The line is a cliff edge in the sense that matters: one pound over it and you are in the trap, and every pound after that is taxed at the trap rate until £125,140. If a pay rise would take you just over the line, the difference between £99,999 and £100,001 is not £2 of pay — it is the start of a 60% marginal rate on everything above.
What people actually do about it
The most common response is pension contributions. A pension contribution reduces the pay your income tax is worked out on — that is true whether it is an ordinary net-pay contribution or salary sacrifice — and it is the reason the trap is discussed so much in pension planning. On a £110,000 salary, a £10,000 pension contribution made through salary sacrifice cuts the pay your tax is charged on, and the pension calculator will show you the exchange: what it costs in take-home pay, what it adds to your pension, and how much tax, National Insurance and student loan it saves. Run your own numbers there before deciding anything, because the answer depends on your loan, your pension scheme, and how much of the trap you are in.
A word of honesty about that response: pension contributions do not make the trap disappear, they move money from the trap into your pension, where it is locked away until retirement. That is a good trade for many people and a bad one for others — it depends on whether you need the money now. The same caution applies to salary sacrifice more generally: it lowers your contractual salary, which can affect mortgage applications, overtime rates, and benefits that are based on gross pay. None of that makes the trap your fault, and none of it is a reason to ignore it. The trap is a feature of the tax system, not a mistake in your pay.
There is one more thing the trap quietly takes, and it is not money. The personal allowance is also the gateway to other things: above £100,000 you lose the entitlement to free childcare hours for three- and four-year-olds in England, and the tax-free childcare scheme closes too. Those are not income tax, and this site's calculators do not cover them, but they are part of the real cost of crossing the line, and they are the reason the trap is talked about as a cliff rather than a slope. If you are near the line and you have young children, the calculation is bigger than the table above — and it is the point at which paid advice, rather than a calculator, earns its fee.
The bottom line
Between £100,000 and £125,140, the UK tax system charges you 60% on your next pound — 62% with National Insurance, 71% with a Plan 2 student loan — not because there is a 60% band, but because every £2 you earn takes £1 of your tax-free allowance with it. A £10,000 rise in that range adds £3,800 a year to your take-home pay, against £5,800 for the same rise just below the line. The allowance is fully gone by £125,140, and above that the marginal rate falls to 47%. If you are anywhere near the line, run your exact salary through the take-home pay calculator and the pension calculator before you agree to a rise, a bonus, or a sacrifice arrangement. The numbers are not complicated — but they are not what the rate table suggests, and that is exactly why they catch people out.
Check your salary against the trap
Run your exact salary through the take-home pay calculator and the pension calculator before you agree to a rise, a bonus, or a sacrifice arrangement.
Rates: GOV.UK — last checked 5 November 2026. This site is not affiliated with HMRC or GOV.UK.