Personal Allowance Taper — The 60% Tax Trap
Between £100,000 and £125,140, your Personal Allowance is progressively withdrawn. This creates an effective marginal tax rate of 60% — one of the highest tax rates in the UK system.
How the 60% trap works
Your Personal Allowance (£12,570 for 2025-26) is tax-free. But once your adjusted net income exceeds £100,000, HMRC withdraws £1 of allowance for every £2 of additional income.
The maths: each extra £1 earned above £100,000 is taxed at 40% Higher Rate, plus the £0.50 of withdrawn allowance is now taxed at another 40%. That’s 40% + (40% × 0.5) = 60% on every marginal pound.
Solution: pension contributions or salary sacrifice that reduce adjusted net income to £100,000 restore the full allowance, saving up to £5,028 in Income Tax (£12,570 × 40%).
Personal Allowance at each income level 2025-26
| Gross income | PA withdrawn | Remaining PA | Income Tax | Take-home | Pension needed | |
|---|---|---|---|---|---|---|
| £100,000 | £0 | £12,570 | £27,432 | £68,557 | £0 | View \u2192 |
| £101,000 | £500 | £12,070 | £28,032 | £68,937 | £1,000 | View \u2192 |
| £102,000 | £1,000 | £11,570 | £28,632 | £69,317 | £2,000 | View \u2192 |
| £103,000 | £1,500 | £11,070 | £29,232 | £69,697 | £3,000 | View \u2192 |
| £104,000 | £2,000 | £10,570 | £29,832 | £70,077 | £4,000 | View \u2192 |
| £105,000 | £2,500 | £10,070 | £30,432 | £70,457 | £5,000 | View \u2192 |
| £106,000 | £3,000 | £9,570 | £31,032 | £70,837 | £6,000 | View \u2192 |
| £107,000 | £3,500 | £9,070 | £31,632 | £71,217 | £7,000 | View \u2192 |
| £108,000 | £4,000 | £8,570 | £32,232 | £71,597 | £8,000 | View \u2192 |
| £109,000 | £4,500 | £8,070 | £32,832 | £71,977 | £9,000 | View \u2192 |
| £110,000 | £5,000 | £7,570 | £33,432 | £72,357 | £10,000 | View \u2192 |
| £112,000 | £6,000 | £6,570 | £34,632 | £73,117 | £12,000 | View \u2192 |
| £114,000 | £7,000 | £5,570 | £35,832 | £73,877 | £14,000 | View \u2192 |
| £115,000 | £7,500 | £5,070 | £36,432 | £74,257 | £15,000 | View \u2192 |
| £116,000 | £8,000 | £4,570 | £37,032 | £74,637 | £16,000 | View \u2192 |
| £118,000 | £9,000 | £3,570 | £38,325 | £75,304 | £18,000 | View \u2192 |
| £120,000 | £10,000 | £2,570 | £39,675 | £75,914 | £20,000 | View \u2192 |
| £122,000 | £11,000 | £1,570 | £41,025 | £76,524 | £22,000 | View \u2192 |
| £123,000 | £11,500 | £1,070 | £41,700 | £76,829 | £23,000 | View \u2192 |
| £124,000 | £12,000 | £570 | £42,375 | £77,134 | £24,000 | View \u2192 |
| £125,000 | £12,500 | £70 | £43,050 | £77,439 | £25,000 | View \u2192 |
| £125,140 | £12,570 | £0 | £43,145 | £77,482 | £25,140 | View \u2192 |
"Pension needed" = contribution to bring adjusted net income back to £100,000, restoring the full £12,570 Personal Allowance.
Income levels in the taper zone
Who is affected by the Personal Allowance taper?
The taper affects UK taxpayers whose adjusted net income (gross income minus pension contributions, Gift Aid donations, and certain reliefs) falls between £100,000 and £125,140. This typically includes senior employees, company directors, and high-earning contractors.
The key word is “adjusted” — your adjusted net income can be reduced below £100,000 even if your gross pay is higher, by making pension contributions. A £115,000 earner contributing £15,000 to their pension has an adjusted net income of £100,000 and retains their full Personal Allowance, saving £6,000+ in tax.
Note: calculations use England/Wales rates. Learn more about the Personal Allowance and how it interacts with Marriage Allowance and Gift Aid.