Most people assume the UK tax system works simply — earn more, pay more tax at a higher rate, keep the rest. For most salaries that's roughly true. But somewhere around £100,000 the maths breaks in a way that catches thousands of workers off guard every year.
It's called the personal allowance taper. And it creates an effective tax rate of 60% on a slice of income that officially attracts 40%.
Every UK taxpayer gets a personal allowance — an amount of income that's completely tax-free. For 2026/27 that figure is £12,570. Once your income crosses £100,000, HMRC starts withdrawing that allowance — £1 for every £2 earned above the threshold. By the time income reaches £125,140 the allowance is gone entirely.
That withdrawal is where the trap comes from.
Here's the maths on a £100 pay rise within the taper zone.
You pay 40% income tax on that £100 — so £40 goes to HMRC immediately. But because that £100 also triggers the loss of £50 of personal allowance, that £50 of previously tax-free income is now taxed at 40% too — another £20. Total tax on a £100 pay rise: £60.
That's the trap. The headline rate is 40%. The effective rate in this band is 60%.
For Scottish taxpayers the situation is worse. Scotland's advanced rate band of 45% applies between £75,001 and £125,140, pushing the effective marginal rate to around 67.5% in the taper zone.
More people than ever. HMRC data obtained by Rathbones through a Freedom of Information request shows around 2.06 million taxpayers are expected to lose some or all of their personal allowance in 2026/27 — up from 1.95 million in 2025/26.
Stephanie Ebner, Financial Planning Lead at Rathbones, described the trap as: “one of the most baffling quirks in our tax system. Originally designed to target the very highest earners, after 15 years of inflation and frozen thresholds, it now ensnares thousands of professionals who were never meant to be caught.”
The threshold freeze is the key driver. Because £100,000 hasn't moved since the taper was introduced while wages have risen steadily, the pool of people caught by it keeps growing.
This is where many people get caught out. The taper applies to adjusted net income — not just your basic salary. Bonuses, benefits in kind, rental income, dividends and savings interest above your personal savings allowance all count.
A worker on £95,000 who receives a £10,000 bonus is inside the trap even though their base salary is below the threshold. The same applies to someone on £98,000 whose employer provides a company car with a taxable benefit value of £5,000.
Charlene Young, senior pension and savings expert at AJ Bell, put it plainly: “Whether or not you're caught by the trap depends on your adjusted net income. This refers to all income that would be subject to tax, less certain reliefs.”
The most commonly used approach is pension contributions. Because pension contributions reduce adjusted net income, contributing enough can bring income back below £100,000 and restore the full personal allowance.
The numbers work in an unusual way here. A £1 pension contribution in the taper zone is effectively worth £1.67 in restored allowance and tax relief combined — making pension contributions in this band among the most tax-efficient in the entire UK system.
Salary sacrifice pension contributions are particularly effective because they reduce gross salary before tax and National Insurance are calculated. Someone on £115,000 who sacrifices £15,000 into their pension brings their adjusted net income to £100,000, restores the full £12,570 personal allowance, and saves both income tax and NI on the sacrificed amount.
Gift Aid donations work similarly — they reduce adjusted net income in the same way as pension contributions. A £8,000 donation to charity becomes £10,000 with Gift Aid, reducing adjusted net income by the full £10,000 gross amount.
The trap can arrive unexpectedly. A promotion, a strong bonus or a new benefit can push income across the threshold without any warning on a payslip. Anyone approaching £100,000 in total income is worth checking their position before the end of the tax year.
The SalarySorted calculator includes a pension sacrifice slider. Entering a salary in the £100,000–£125,140 range and adjusting the pension contribution shows exactly how much of the personal allowance is restored at different contribution levels.
Calculate your take-home pay and model pension sacrifice →For guidance only — not financial advice. All figures based on 2026/27 HMRC rates as confirmed by GOV.UK. Personal allowance taper figures sourced from the House of Commons Library and HMRC.