Learn how the UK personal allowance taper creates a hidden 60% tax rate between £100K and £125K, and practical strategies to avoid it when evaluating job offers.
This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax rules and thresholds are subject to change. Always consult a qualified adviser for guidance specific to your circumstances.
One of the least understood quirks of the UK tax system hits earners between £100,000 and £125,140 particularly hard. In this income band, your effective marginal tax rate isn't 40% — it's 60%. If you're evaluating a job offer that pushes you past the £100K mark, understanding this trap is critical.
Every UK taxpayer gets a £12,570 personal allowance — income you don't pay tax on. But once your adjusted net income exceeds £100,000, HMRC claws it back: you lose £1 of allowance for every £2 you earn above the threshold.
By the time you reach £125,140, your personal allowance has been reduced to zero entirely.
| Adjusted Net Income | Personal Allowance | Allowance Lost |
|---|---|---|
| £100,000 | £12,570 | £0 |
| £110,000 | £7,570 | £5,000 |
| £120,000 | £2,570 | £10,000 |
| £125,140 | £0 | £12,570 |
Consider a £1,000 pay rise when you're earning £105,000:
Add 2% employee National Insurance on top, and the effective marginal rate hits 62%. For every additional £1,000 you earn in this band, you keep just £380.
Let's say you're choosing between two job offers:
The £20,000 difference in gross pay might suggest a proportionally higher take-home. But the reality is different:
| Offer A (£95K) | Offer B (£115K) | |
|---|---|---|
| Personal allowance | £12,570 | £5,070 |
| Income tax | ~£21,432 | ~£33,432 |
| Employee NI | ~£5,066 | ~£5,466 |
| Take-home | ~£68,502 | ~£76,102 |
The extra £20,000 gross only yields roughly £7,600 additional take-home — an effective rate of 62% on the incremental income. You might find that the lifestyle difference doesn't justify the jump, or that other benefits in Offer A make it competitive.
The most common approach. Contributing to a pension reduces your adjusted net income — the figure HMRC uses for the taper calculation. If your salary is £115,000, a £15,000 pension contribution brings your adjusted income to £100,000, fully restoring your personal allowance.
The tax relief on that £15,000 contribution is extraordinary:
If your employer offers salary sacrifice for pension contributions, the savings are even greater. You avoid both income tax and National Insurance on the sacrificed amount. Note that from April 2029, the NI saving on salary sacrifice will be capped at £2,000 per year — so maximising this now is particularly worthwhile.
Gift Aid donations also reduce your adjusted net income. If you regularly give to charity, structuring donations through Gift Aid can help you stay below the £100,000 threshold.
If you have any control over when bonuses are paid or shares vest, spreading income across tax years can prevent you from hitting the taper zone in a single year. This is especially relevant for tech workers whose RSU vesting schedules create lumpy income.
When comparing job offers, the headline salary is misleading in this income range. A £10,000 raise might only put an extra £3,800 in your pocket, while benefits like employer pension contributions, private health insurance, or additional holiday could be worth more in real terms.
OfferEval's calculator automatically accounts for the personal allowance taper when computing your take-home pay. Use it to see the true after-tax value of any offer, and the comparison tool to evaluate multiple offers side by side — including pension contributions, equity, and other benefits that affect your adjusted net income.
Use our free calculator to get an instant net income breakdown for any UK salary — including tax, NI, student loans, and pension.
Try the calculatorWritten by OfferEval Team
Helping professionals understand UK tax and make smarter career decisions.