UK £100k Tax Planning Complete Strategy 2026/27
UK £100,000 tax planning 2026/27: the 62% Personal Allowance taper, pension salary sacrifice, Gift Aid, HICBC and student loan interaction, worked figures.
How the Personal Allowance taper works between £100,000 and £125,140, and what reduces adjusted net income: pension salary sacrifice, relief-at-source contributions and Gift Aid. Take-home figures come from our salary engine for an employee in England on the 2026/27 rules; Scottish bands differ.
The £100k zone
The Personal Allowance of £12,570 falls by £1 for every £2 of adjusted net income above £100,000, and is nil from £125,140 (ITA 2007 s.35). Marginal rates on employment income in 2026/27:
- £100,000 to £125,140: 62% (40% Income Tax, plus 40% on the 50p of allowance lost, plus 2% NI)
- Above £125,140: 47% (45% Income Tax plus 2% NI)
So an employee on £120,000 keeps less of an extra pound than one on £130,000.
Sacrificing the whole taper band
An employee earning £125,140 who sacrifices £25,140 into an employer pension:
| Scenario | Take-home | Into pension |
|---|---|---|
| £125,140, no sacrifice | £78,111 | £0 |
| £125,140, £25,140 sacrificed | £68,557 | £25,140 |
| Cost in take-home | £9,553 | - |
| Effective relief | - | 62% |
Sacrifice cannot take your cash pay below the National Minimum Wage, and your employer must agree to it. Pension contributions also count against the annual allowance.
Other levers
- Gift Aid: ITA 2007 s.58 deducts the grossed-up gift from adjusted net income. A £4,000 donation is a £5,000 gross gift. Inside the taper it saves £3,000 of Income Tax in total (60% of the gross), of which the charity receives the basic-rate part and you reclaim the rest, so the £5,000 gift costs you £2,000. No NI is saved.
- Relief-at-source personal pension contributions: the gross contribution is deducted from adjusted net income (s.58 Step 3), and higher-rate relief is claimed through Self Assessment.
- EIS and VCT: EIS gives 30% Income Tax relief on up to £1 million a year (£2 million if at least £1 million is in knowledge-intensive companies); VCT relief is 20% on up to £200,000 for 2026/27. Both reduce the tax bill but not adjusted net income, so they do not restore the Personal Allowance.
- Cycle to work and low-emission cars: cycle-to-work and cars with CO2 emissions of no more than 75g/km are outside the optional remuneration rules, so a sacrifice for them reduces taxable pay (gov.uk salary sacrifice guidance). A car is still taxed as a benefit in kind.
- Share Incentive Plan partnership shares: bought from salary before tax, up to £1,800 or 10% of income a year, whichever is lower.
- Timing: where you control when income arises (for example dividends from your own company), spreading it across tax years can keep each year below the taper.
Worked example: £140,000 employee with two children and a Plan 2 loan
- No planning: take-home £73,694 after Income Tax, NI, Plan 2 repayments of £9,955 and the High Income Child Benefit Charge of £2,337.
- Sacrificing £40,000 (adjusted net income £100,000): take-home £59,865, with £40,000 in the pension.
- Cost £13,829 of take-home for £40,000 of pension: relief of about 65.43%, from Income Tax, NI and the lower Plan 2 repayments.
- The Child Benefit charge does not change: at £100,000 adjusted net income it is still the full amount. Only getting below £80,000 would reduce it.
Related pages
Frequently asked questions
Why is the £100k zone so expensive?
Between £100,000 and £125,140 of adjusted net income the Personal Allowance is withdrawn at £1 for every £2 (ITA 2007 s.35(2)). Each extra £1 is taxed at 40% and also removes 50p of allowance, which is then taxed at 40%: 60% Income Tax, 62% with 2% employee NI. Losing the full £12,570 allowance costs £5,028 of extra tax. These are the England, Wales and Northern Ireland bands; Scottish bands differ.
How does pension salary sacrifice take me out of the taper?
Salary sacrifice lowers your pay, so it lowers your net income and therefore your adjusted net income. A £125,140 employee who sacrifices £25,140 gets the whole Personal Allowance back. On our salary engine the take-home falls from £78,111 to £68,557, so £25,140 reaches the pension for £9,553 of take-home: relief of about 62%.
What other levers reduce adjusted net income?
ITA 2007 s.58 deducts the grossed-up amount of Gift Aid donations and the gross amount of relief-at-source pension contributions from net income. Salary sacrifice and net pay arrangement pension contributions already reduce net income. Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) relief is a reduction of the tax bill, not a deduction from income, so it does not restore the Personal Allowance.
Should I take a £105k job over a £95k one?
On the salary engine, £95,000 gives £65,657 take-home and £105,000 gives £70,457: £4,800 more for £10,000 more gross. Taking the £105,000 job and sacrificing £5,000 into a pension gives £68,557 take-home plus £5,000 in the pension. Employee NI and Income Tax only; employer contributions are extra.
How does the High Income Child Benefit Charge interact at £100k?
The charge is 1% of the Child Benefit for every £200 of adjusted net income above £60,000, so it equals the whole benefit at £80,000 (ITEPA 2003 s.681C). At £100,000 it is already at its maximum, £2,337 a year for two children at 2026/27 rates. A pension contribution only reduces it if it brings adjusted net income below £80,000.
What about my student loan?
Plan 2 repayments are 9% of earnings above £29,385. Inside the taper that takes an employee's marginal deduction to 71%. Salary sacrifice lowers the earnings the loan is collected on, so it reduces repayments too; a relief-at-source personal contribution does not, because it is paid from net pay.
Which childcare support is lost above £100k?
Tax-Free Childcare and Free Childcare for Working Parents (the 30 hours in England) are both unavailable if you or your partner expect adjusted net income over £100,000 in the tax year. There is no taper: one pound over the limit removes the support. Pension contributions and Gift Aid that bring adjusted net income back to £100,000 restore eligibility.
Can I get Marriage Allowance at this income?
No. A spouse can only receive Marriage Allowance if they do not pay tax above the basic rate, which in England, Wales and Northern Ireland means income no higher than £50,270. At £100,000 a lower-earning spouse cannot transfer part of their allowance to you (ITA 2007 s.55B).