Tax code2 min read · Updated 19 October 2026
The £100,000 tax trap: why pay between £100k and £125,140 is taxed at 60%
Above £100,000 you lose £1 of tax-free allowance for every £2 earned. Here is what that does to your tax and how people reduce it.
How it works
Your allowance falls by £1 for every £2 over £100,000. By £125,140 it is zero. Each extra £1 in that band loses 40p to tax and takes away tax-free allowance worth another 20p, so the effective rate is 60%.
Example
| Salary | Income tax / take-home a month |
| £100,000 | £27,432 / £5,713 |
| £110,000 | £31,432 / £6,196 |
| £120,000 | £35,432 / £6,680 |
| £125,140 | £37,488 / £6,928 |
Ways to reduce it
Paying into a pension through salary sacrifice or a personal pension can reduce adjusted income. Check the limits and talk to your pension provider.
Common questions
Why is tax so high between £100k and £125k?
You lose £1 of tax-free allowance for every £2 above £100,000, which creates an effective 60% rate.
How do I avoid it?
Reducing taxable income, for example with pension contributions, can restore some allowance.