£100k tax trap calculator

See your real marginal tax rate once your income passes £100,000, the pension contribution that brings it back down, and what that does for your personal allowance and Tax-Free Childcare.

Figures for the 2026/27 tax year. Last reviewed 01-09-2026.

What the £100k tax trap actually is

Above £100,000 of adjusted net income, your personal allowance shrinks by £1 for every £2 you earn over that line. By £125,140 it's gone completely. Losing allowance means more of your income becomes taxable, on top of the tax you're already paying on the extra earnings themselves — so each additional pound in that band is taxed twice over, once directly and once through the allowance you lose.

The result is an effective marginal rate of 60% for most people in that band — the 40% higher rate, inflated by the extra 50% from the allowance taper (40% x 1.5 = 60%). Scottish taxpayers see an even sharper effect, because their higher and advanced rates are steeper to begin with. It's one of the strangest quirks in the UK tax system: a £1,000 pay rise at £110,000 can leave you with less than £400 of it, once tax and the lost allowance are both accounted for.

Adjusted net income isn't just your salary. It's your total taxable income, minus gross pension contributions and Gift Aid donations. That's exactly why pension contributions are the standard way out of this band — they reduce the adjusted net income the taper is measured against, not just your take-home pay.

A worked example

Take someone earning £110,000 with no current pension contributions and two children using Tax-Free Childcare. Their adjusted net income of £110,000 sits inside the taper zone, so their effective marginal rate is 60%. To bring adjusted net income back down to exactly £100,000, they need to contribute an extra £10,000 to their pension.

Because that whole £10,000 sits inside the 60% zone, the tax saved is £6,000 — 60% of the contribution. Their personal allowance, tapered down to £7,570 at £110,000, is restored to the full £12,570. And because their income drops to £100,000 or below, they requalify for Tax-Free Childcare, which was cut off entirely above the £100,000 limit — worth up to £2,000 a year per child in government top-up, or £4,000 for a disabled child.

The pension contribution costs £10,000 gross, but with £6,000 of tax relief, the real cost to get there is £4,000 — for £10,000 landing in the pension, a restored personal allowance, and childcare support back in place. That combination is why this particular income band is where pension contributions tend to do the most work, pound for pound, of almost anywhere in the tax system.

Two different cliffs, not one

It's worth being clear that the personal allowance taper and the Tax-Free Childcare cut-off behave completely differently, even though they share the same £100,000 threshold. The allowance taper is gradual — cross £100,000 by £1 and you lose 50p of allowance, cross by £10,000 and you lose £5,000. There's no single moment where everything changes.

Tax-Free Childcare is a hard cliff. Each parent's adjusted net income must not exceed £100,000 at all. Go a single pound over and the whole benefit disappears for that tax year, not just a proportion of it — potentially several thousand pounds a year for a family with two or three children in paid childcare. If you're close to this line and have children in childcare, the childcare cliff is usually worth more attention than the marginal rate itself, because it's total rather than gradual.

Common mistakes people make

The most common one is not realising the trap exists until a bonus or pay rise pushes income over £100,000 unexpectedly, at which point the pension contribution needed to fix it has to come from that year's cash flow rather than being planned for in advance.

The second is contributing an arbitrary round number — £5,000, say — rather than working out the actual adjusted net income and calculating precisely what's needed to get back to £100,000. Under-contributing leaves part of the 60% zone (and possibly Tax-Free Childcare) unaddressed; over-contributing gives up cash unnecessarily once you're back under the line, since relief below £100,000 is at the ordinary marginal rate, not 60%.

The third is forgetting that both partners in a couple are assessed separately for Tax-Free Childcare. If one partner earns £95,000 and the other £115,000, only the higher earner's income needs bringing down — contributing on the lower earner's side wouldn't restore eligibility at all.

The Scottish tax position

The personal allowance taper works identically in Scotland — it's a UK-wide, not devolved, feature of the tax system. What differs is the band rate it's layered on top of. Scotland's higher rate (42%) and advanced rate (45%, from £75,000-ish equivalent bands) apply at different points than rUK's 40%, so the effective marginal rate inside the £100k-£125,140 taper zone can reach around 63% or 67.5% for a Scottish taxpayer, rather than rUK's 60%, depending on exactly where their income falls.

Frequently asked questions

Why is the marginal rate around £100,000 higher than the 45% additional rate?

Because two things happen to the same pound of income at once: it's taxed at your normal band rate, and it also causes you to lose 50p of personal allowance, which then gets taxed too. Combined, that produces an effective rate of around 60% between £100,000 and £125,140 for most rUK taxpayers — higher than even the 45% additional rate that applies well above this zone.

Does salary sacrifice work the same way as a pension contribution here?

Yes — sacrificing salary reduces your adjusted net income in the same way a pension contribution does, because the sacrificed amount never counts as income in the first place. See the salary sacrifice calculator for how that compares once National Insurance is factored in too.

What counts towards adjusted net income?

Broadly, your total taxable income (salary, bonus, rental income, savings and dividend income) minus gross pension contributions and Gift Aid donations grossed up. It is not simply your salary, which is why two people on the same salary can have different adjusted net income once contributions are taken into account.

Do I lose Tax-Free Childcare gradually, like the personal allowance?

No. Tax-Free Childcare is an all-or-nothing cliff edge at £100,000 of adjusted net income per parent — there's no tapering. One pound over and the support stops entirely for that tax year; get back to £100,000 or below and it's available again.

Is it always worth contributing enough to get under £100,000?

This calculator shows what contributing that amount would achieve — the tax saved and any Tax-Free Childcare regained — as an illustration, not a recommendation. Whether it's right for you depends on what else you'd do with that money and your wider financial position.

Does this apply if I'm self-employed?

The same adjusted net income mechanics apply regardless of whether your income is from employment or self-employment. The main practical difference is how you make the pension contribution — typically relief at source for the self-employed, since there's no employer payroll to run a net pay scheme through.