£100k Tax Trap
& Salary-Sacrifice Calculator
Between £100,000 and £125,140 the UK's tapered Personal Allowance creates a 60% effective tax rate (62% with NI) — and at £100k, parents also fall off the Tax-Free-Childcare cliff. See your marginal rate and the exact pension sacrifice to get under £100,000.
Read the full answer — method, rates and figures
Quick answer: In 2026-27 (England, Wales & NI) every £1 of adjusted net income between £100,000 and £125,140 is taxed at an effective 60% — 40% income tax plus the 40% tax on the 50p of Personal Allowance withdrawn — or about 62% once 2% employee National Insurance is added. To escape it, salary-sacrifice enough pension to bring your adjusted net income to £100,000: if you earn £110,000, sacrificing £10,000 gets you there, and because that money would have been taxed at ~62%, it usually cuts your take-home by only about £3,800 while putting the full £10,000 into your pension.
Parents fare worse still — Tax-Free Childcare (up to £2,000/child) and the 15/30 funded hours in England vanish at exactly £100,000 of ANI, tested per parent, so the effective rate on income just over £100k can top 100%. The Personal Allowance (£12,570) and the £125,140 threshold are frozen to April 2031.
Scotland's income-tax rates differ, but the £100k taper and childcare cliff apply UK-wide.
Salary sacrifice reduces your adjusted net income directly (and saves NI too).
Up to £2,000/child/yr lost over £100k.
Your yearly £ value of 15/30 funded hours (England), if any.
Adjusted net income
£115,000
after existing sacrifice
In the 60% trap?
Yes
£100k–£125,140
Marginal rate now
62.0%
tax + NI on next £1
Sacrifice to £100k
£15,000
into your pension
The trade: sacrifice £15,000 to reach £100,000
Take-home you give up
£5,700
≈ 38.0% of the sacrifice
Into your pension
£15,000
before any employer NI top-up
Childcare kept
£0
none entered
You give up £5,700 of take-home to gain £15,000 — £15,000 in pension. That is why sacrificing under £100k is usually a clear win.
What the £15,000 over £100,000 is costing you
- Tax + NI on that band: £9,300
- Total penalty: £9,300 — an effective 62.0% on the amount over £100k.
Save your £100k trap result
Richify tracks your pay and pension together, so you can see what a salary sacrifice adds to your net worth.
Sacrifice to £100k
£15,000
Marginal rate now
62.0%
Adjusted net income
£115,000
In the 60% trap?
Yes
How much should I salary-sacrifice to get under £100,000?
Bring your adjusted net income — roughly gross pay minus pension salary sacrifice — down to £100,000. Between £100,000 and £125,140 your £12,570 Personal Allowance is withdrawn at £1 for every £2, so each extra pound is taxed at an effective 60% (about 62% with 2% National Insurance). If you earn £110,000, sacrificing £10,000 gets you to £100,000; because that money would have been taxed at ~62%, it typically cuts take-home by only around £3,800 while the full £10,000 goes into your pension.
For parents it is starker: Tax-Free Childcare (up to £2,000/child) and the 15/30 funded hours in England disappear as a hard cliff at exactly £100,000 of ANI, tested per parent — so the effective rate on income just over £100k can exceed 100%. Salary sacrifice also saves National Insurance, unlike a personal pension contribution. Child Benefit has usually gone before this point: the charge claws it back between £60,000 and £80,000 of adjusted net income, and the High Income Child Benefit Charge calculator shows what a sacrifice recovers there. Personal Allowance (£12,570) and the £125,140 threshold are frozen to April 2031. See also our take-home pay and pension tax relief calculators.
rUK marginal rates around £100k (2026-27)
| Adjusted net income | Income tax | + NI | Combined marginal |
|---|---|---|---|
| £50,271 – £100,000 | 40% | 2% | 42% |
| £100,001 – £125,140 | 60% | 2% | 62% |
| Above £125,140 | 45% | 2% | 47% |
Sources: GOV.UK “Income Tax rates and Personal Allowances” (PA £12,570, taper £1 per £2 over £100,000, additional-rate threshold £125,140, all frozen to Apr 2031 per Autumn Budget 2025); GOV.UK “National Insurance rates” (employee main rate 8%, 2% above £50,270); GOV.UK “Tax-Free Childcare” and “30 hours free childcare” (£100,000 ANI cliff, tested per parent). Scotland sets different income-tax bands — the taper and childcare cliff still apply.
Education only, not financial, tax or legal advice. Figures are 2026-27 for England, Wales & Northern Ireland; Scottish income-tax rates differ (the £100k taper and childcare cliff still apply). The tool simplifies: it treats your inputs as your only taxable income, applies salary sacrifice as a direct reduction to adjusted net income, ignores student-loan repayments and the High Income Child Benefit Charge, and models Tax-Free Childcare at up to £2,000/child with any funded-hours value you enter. Keep enough salary to meet your outgoings and to earn a qualifying year for the State Pension. Verify on gov.uk and speak to a regulated adviser before acting. Last updated: July 2026.
Last reviewed 13 October 2026 by the Richify AI agent team.
Reviewed by Felix, Richify's AI CFO — an AI author, presented as one.
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How to use this calculator
- Enter your gross salary and any bonus or other taxable pay for the year.
- Add any pension you already salary-sacrifice (this already lowers your adjusted net income).
- If you use Tax-Free Childcare or funded hours, enter how many children and the annual value of funded hours you'd lose over £100k.
- Read your adjusted net income, whether you're in the 60% trap, and the exact sacrifice needed to get under £100,000 — and what it actually costs you.
❓ Frequently Asked Questions
What is the 60% tax trap in the UK?
Between £100,000 and £125,140 of adjusted net income, your £12,570 tax-free Personal Allowance is withdrawn at £1 for every £2 you earn over £100,000. So each extra £1 is taxed at 40% and also removes 50p of allowance that then gets taxed at 40% — an effective 60% income-tax rate.
Add 2% employee National Insurance and the marginal rate is about 62%. Above £125,140 the allowance is fully gone and the rate drops back to 47% (45% + 2%).
How much should I salary-sacrifice to get under £100,000?
Enough to bring your adjusted net income (roughly gross pay minus pension sacrifice) down to £100,000. If your ANI is £110,000, sacrificing £10,000 into your pension gets you to exactly £100,000 — and because that £10,000 would have been taxed at ~62% (and, for parents, cost you childcare too), it typically reduces your take-home by only around £3,800 while putting the full £10,000 into your pension.
This calculator shows your exact figure.
Why do parents earning just over £100k end up worse off?
Tax-Free Childcare (up to £2,000 per child a year) and the 15/30 funded hours in England are a hard cliff-edge at £100,000 adjusted net income — tested against each parent separately. Lose them and a single pound over £100k can cost you thousands.
For a parent with two children in funded childcare, the effective rate on income just above £100,000 can exceed 100% — you genuinely take home less by earning more, until you climb well past the cliff. Salary sacrifice is the standard fix.
What counts as adjusted net income?
Adjusted net income is your total taxable income (salary, bonus, rental, dividends, savings interest, etc.) minus grossed-up personal pension contributions and Gift Aid donations. Salary-sacrifice pension contributions reduce your gross pay before it's counted, so they lower ANI directly.
The £100,000 Personal Allowance taper, the Tax-Free Childcare limit and the High Income Child Benefit Charge are all measured on ANI, not your headline salary.
Does salary sacrifice save National Insurance too?
Yes. Unlike a personal pension contribution claimed through your tax return, salary sacrifice reduces your gross pay, so you save income tax AND employee National Insurance on the sacrificed amount — and many employers add some or all of their NI saving to your pension.
That's why salary sacrifice is usually the most efficient way to duck under £100,000. Keep enough salary to cover your outgoings and stay above the level needed for the full state-pension qualifying year.
Does this apply in Scotland?
The £100,000 Personal Allowance taper and the childcare cliff are UK-wide, so they apply in Scotland identically. However, Scotland sets its own income-tax bands and rates (starter, basic, intermediate, higher, advanced and top), so the exact marginal rate in the trap differs from the rUK figures shown here.
Scottish taxpayers should treat the tax numbers as indicative — the sacrifice-to-£100,000 target and the childcare cliff still hold.
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Further Reading
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