What is the £100k tax trap?

It is the combined effect of the Personal Allowance taper, the Tax-Free Childcare cliff, and the 30 hours free-childcare cliff that all hit at £100,000 of adjusted net income. The taper alone takes effective marginal Income Tax to 60% (62% with NI) on every pound between £100,000 and £125,140; for parents of pre-school children the lost childcare benefits add several thousand pounds more on top.

Is the £100,000 trigger gross or net?

It is adjusted net income, which broadly means your gross pay minus pension contributions made via salary sacrifice or relief-at-source, minus Gift Aid donations grossed up. So a £105,000 salary with £6,000 of salary-sacrifice pension has adjusted net income of £99,000 and avoids the trap entirely.

Should I refuse a pay rise above £100k?

Almost never - the marginal rate is 62%, not 100%, so you still keep 38p of every additional pound earned. The right move is usually to accept the rise but immediately route the marginal pounds into pension sacrifice, which reclaims the lost allowance and gives you the full uplift in retirement-saving form rather than taxed cash.

Does the trap reset at £125,140?

The taper ends at £125,140 - the Personal Allowance is fully removed by that point. From £125,140 onwards you pay 45% additional-rate Income Tax plus 2% NI = 47% marginal, which is materially lower than the 62% inside the taper. So earning £150,000 is more tax-efficient (per marginal pound) than earning £120,000.

How does the £100k trap interact with bonuses?

Bonuses are taxed as employment income and count toward the £100,000 line. A £20,000 bonus on top of a £90,000 salary sends £10,000 of it into the taper band - that £10,000 is taxed at 62% marginal. Sacrificing the bonus into pension before payment (a common bonus-sacrifice scheme) avoids this entirely.

Is the trap the same in Scotland?

The Personal Allowance is UK-wide, so the £100,000 trigger is the same. Scotland has its own income-tax bands above the PA: at £100,000 you are in the Scottish higher rate (42%) or top rate above £125,140 (48%). The combined marginal in the Scottish PA-taper band is around 64% including 2% NI - slightly worse than rest-of-UK.

The £100k Tax Trap, with Worked Examples

For 2026/27, every pound earned between £100,000 and £125,140 triggers the Personal Allowance taper - effective marginal Income Tax of 60% (62% with the 2% National Insurance band). It is the steepest part of the UK income tax curve, and the only place where earning more can feel like getting punished for it.

Take-home ladder, £90k to £140k

The salary calculator on this site computes the figures below using the 2026/27 tax ruleset published by HMRC (citations in the footer). England rest-of-UK, no pension contribution, no student loan:

Gross salary	Annual take-home	Monthly
£90,000	£62,757	£5,230
£95,000	£65,657	£5,471
£99,000	£67,977	£5,665
£100,000	£68,557	£5,713
£105,000	£70,457	£5,871
£110,000	£72,357	£6,030
£115,000	£74,257	£6,188
£120,000	£76,157	£6,346
£125,140	£78,111	£6,509
£130,000	£80,686	£6,724
£140,000	£85,986	£7,166

Look at the gap between £100,000 and £125,140: a £25,140 pay rise only buys £9,553 of extra take-home - an effective marginal rate of 62.0% across that band.

What causes the 62% wall

The 2026/27 Personal Allowance is £12,570 - tax-free at the bottom of your income. HMRC reduces it by £1 for every £2 of adjusted net income above £100,000. By the time you hit £125,140 the allowance is gone entirely. The lost allowance is taxed at the 40% higher rate, and so is the marginal pound that triggered the loss, giving:

40% Income Tax on the marginal pound.
20% additional tax on the 50p of Personal Allowance you just lost (40% rate × 50p = 20p).
2% National Insurance on the marginal pound.
Total: 62p of every additional pound.

The childcare cliff

For parents with pre-school children the trap is even steeper. At £100,000 adjusted net income both Tax-Free Childcare (up to £2,000 per child per year) and 30 hours free childcare (worth £6,000-£10,000 per child depending on local authority and provider rates) are withdrawn entirely - not tapered, gone overnight.

For a household with two pre-school children, crossing £100,000 by £1 can cost £8,000-£15,000 of childcare support in addition to the 62% marginal Income Tax. The break-even point can be £130,000+ gross before a family is net-better-off than at £99,999.

The pension-sacrifice play

Salary sacrifice into a workplace pension reduces gross pay before Income Tax is calculated, lowering adjusted net income pound for pound. The standard move at £105,000-£125,000:

Calculate sacrifice = gross - £100,000.
Set workplace pension sacrifice to that amount (most employers' schemes are flexible up to the annual allowance of £60,000).
Adjusted net income now £100,000, Personal Allowance fully restored, childcare benefits restored, marginal rate drops to 40% on income above £50,270.
Sacrificed amount lands in pension at 0% Income Tax cost (vs 62% if taken as cash) - the most tax-efficient retirement saving available in the UK.

Frequently asked questions

What is the £100k tax trap?: It is the combined effect of the Personal Allowance taper, the Tax-Free Childcare cliff, and the 30 hours free-childcare cliff that all hit at £100,000 of adjusted net income. The taper alone takes effective marginal Income Tax to 60% (62% with NI) on every pound between £100,000 and £125,140; for parents of pre-school children the lost childcare benefits add several thousand pounds more on top.
Is the £100,000 trigger gross or net?: It is adjusted net income, which broadly means your gross pay minus pension contributions made via salary sacrifice or relief-at-source, minus Gift Aid donations grossed up. So a £105,000 salary with £6,000 of salary-sacrifice pension has adjusted net income of £99,000 and avoids the trap entirely.
Should I refuse a pay rise above £100k?: Almost never - the marginal rate is 62%, not 100%, so you still keep 38p of every additional pound earned. The right move is usually to accept the rise but immediately route the marginal pounds into pension sacrifice, which reclaims the lost allowance and gives you the full uplift in retirement-saving form rather than taxed cash.
Does the trap reset at £125,140?: The taper ends at £125,140 - the Personal Allowance is fully removed by that point. From £125,140 onwards you pay 45% additional-rate Income Tax plus 2% NI = 47% marginal, which is materially lower than the 62% inside the taper. So earning £150,000 is more tax-efficient (per marginal pound) than earning £120,000.
How does the £100k trap interact with bonuses?: Bonuses are taxed as employment income and count toward the £100,000 line. A £20,000 bonus on top of a £90,000 salary sends £10,000 of it into the taper band - that £10,000 is taxed at 62% marginal. Sacrificing the bonus into pension before payment (a common bonus-sacrifice scheme) avoids this entirely.
Is the trap the same in Scotland?: The Personal Allowance is UK-wide, so the £100,000 trigger is the same. Scotland has its own income-tax bands above the PA: at £100,000 you are in the Scottish higher rate (42%) or top rate above £125,140 (48%). The combined marginal in the Scottish PA-taper band is around 64% including 2% NI - slightly worse than rest-of-UK.