The £100k Tax Trap Explained
Between £100,000 and £125,140 the UK Personal Allowance is withdrawn — creating an effective 60% marginal Income Tax rate. Here's what the numbers actually look like.
The trap in one number
Going from £100,000 to £110,000 gross gives you only £3,800 extra take-home. That's 38% of the raise.
Going from £100,000 to £125,140 — earning £25,140 more gross — adds only £9,553 to your annual take-home.
The trap, visualised
Green area: annual take-home as gross salary rises. Pink line: marginal rate you keep on each extra £. Between £100,000 and £125,140 the marginal Income Tax rate jumps to 60% (plus 2% NI) as the Personal Allowance is withdrawn.
Chart values are sourced from the same deterministic PAYE engine as the calculator and the table below. The table underneath is the authoritative numerical record for accessibility.
What happens at each salary
Two different rates for two different questions. Effective (average) is your total tax + NI divided by your total gross — this stays under 40% for the whole trap zone because it's averaged across your whole salary. Marginal on next £ is what HMRC actually takes from the next pound you earn — this is the number that jumps to ~62% between £100k and £125,140 because the Personal Allowance is being withdrawn at £1 per £2 on top of the higher-rate 40% band and 2% NI.
| Gross salary | Income Tax | NI | Take-home | Effective(avg) | Marginal(next £) |
|---|---|---|---|---|---|
| £90,000 | £23,432 | £3,811 | £62,757 | 30.3% | 42% |
| £100,000 | £27,432 | £4,011 | £68,557 | 31.4% | 52% |
| £105,000 | £30,432 | £4,111 | £70,457 | 32.9% | 62% |
| £110,000 | £33,432 | £4,211 | £72,357 | 34.2% | 62% |
| £115,000 | £36,432 | £4,311 | £74,257 | 35.4% | 62% |
| £120,000 | £39,432 | £4,411 | £76,157 | 36.5% | 62% |
| £125,140 | £42,516 | £4,513 | £78,111 | 37.6% | 54% |
| £130,000 | £44,703 | £4,611 | £80,686 | 37.9% | 47% |
| £150,000 | £53,703 | £5,011 | £91,286 | 39.1% | 47% |
Rose-shaded rows sit inside the PA-taper zone (£100,000 → £125,140). Marginal rate is derived by nudging the tax engine by £100 either side of each salary — no separate marginal-rate formula is used.
Frequently asked
What is the £100k tax trap?
Between £100,000 and £125,140 the UK Personal Allowance is withdrawn by £1 for every £2 earned. That effectively adds a 20% surcharge to your marginal 40% rate, making the effective marginal Income Tax rate 60% (plus 2% employee NI). Above £125,140 the marginal Income Tax rate drops back to 45% (plus 2% NI).
Is the tax trap a cliff or a gradual effect?
It applies smoothly across the £100k → £125,140 range but the psychological effect concentrates around £100k because that's where the taper begins.
How do I avoid the £100k tax trap?
Pension salary sacrifice or SIPP contributions bring your taxable income back below £100k, restoring your Personal Allowance. This is not financial advice — speak to a qualified adviser about your situation.
What is the effective marginal rate in the £100k zone?
About 60% for the Income Tax portion alone (40% higher rate + 20% from the withdrawn Personal Allowance) plus 2% employee National Insurance = ~62% marginal all-in for most PAYE earners in England / Wales / NI.
Reference baseline: £100,000 gross gives £68,557 annual take-home (31.4% effective rate). All figures are deterministic 2026/27 PAYE estimates. Not financial advice.