£100,000 tax trap calculator 2026/27
Between £100,000 and £125,140 the taxman quietly takes 60%. See exactly how much to pay into a pension to escape it — and how little it really costs you.
At £120,000 you lose £10,000 of your Personal Allowance — that slice is taxed at an effective 60%.
England, Wales & NI. Salary-sacrifice pension, within your annual allowance.
Escape the trap
2026/27- Take-home now
- £76,157
- Pay into pension
- £20,000
- Take-home then
- £68,557
- Allowance restored
- £12,570
Effective relief
£20,000 in pension for £7,600 net
62%
Paying £20,000 into your pension cuts your take-home by only £7,600 — the rest is tax and NI you would have paid anyway.
Verified · 2026/2721 June 2026
Why £100k is the worst place to earn
Cross £100,000 and something strange happens. For every £2 you earn, you lose £1 of your £12,570 tax-free Personal Allowance — and it has gone entirely by £125,140. That lost allowance is taxed on top of the 40% you already pay, so the slice between £100,000 and £125,140 is taxed at an effective 60%. A £5,000 pay rise can leave you barely £2,000 better off.
The fix is a pension. Contributions reduce your adjusted net income — the figure HMRC uses for the taper — so paying the difference between your income and £100,000 into a pension restores your full allowance and wipes out the 60% band. Because the relief is given at your marginal rate, a contribution in this zone is relieved at 60%, and a salary-sacrifice arrangement adds the National Insurance saving on top.
In practice that means £1 of pay you would mostly lose to tax becomes £1 in your pension for a fraction of the cost. Higher earners typically use a workplace pension or a personal pension / SIPP to do this; it is worth speaking to a financial adviser about your annual allowance. For your full breakdown, use the main take-home calculator or the salary-sacrifice calculator.
£100k trap questions
- What is the £100,000 tax trap?
- Between £100,000 and £125,140 your tax-free Personal Allowance is withdrawn by £1 for every £2 you earn. On top of 40% tax, losing the allowance means that slice of income is effectively taxed at 60%.
- How do I avoid the 60% rate?
- Pension contributions reduce your adjusted net income — the figure the taper is based on. Paying enough into a pension to bring it down to £100,000 restores your full allowance and removes the 60% band.
- How much should I contribute?
- To fully escape the trap, the gap between your income and £100,000 (so £20,000 on a £120,000 salary), as long as it is within your pension annual allowance.
- Is this the same as a salary sacrifice?
- A salary-sacrifice pension is the most efficient route because it also saves National Insurance, pushing the effective relief above 60%. Relief-at-source contributions give the income-tax relief but not the NI saving.