The £100k–£125k tax trap: how the 60% marginal rate really works
Between £100,000 and £125,140 of adjusted income, the personal allowance tapers away and the effective marginal rate of income tax on the next pound reaches about 60% — before National Insurance. This page shows what that band actually costs at every point in the ONS earnings distribution.
Effective marginal rate in the band
60%
40% tax + 20% personal-allowance withdrawal
Band width
£25,140
£100,000 → £125,140
Allowance lost across the band
£12,570
£1 of allowance withdrawn per £2 of income
Cliff at £100,000
£580
extra take-home from £99,000 → £100,000
Why the taper exists
Everyone gets a personal allowance of £12,570 of tax-free income. Once your adjusted income passes £100,000, the allowance is withdrawn at £200 of income for every £100 of allowance — a £1-for-£2 withdrawal. The trap ends at £125,140, where the allowance reaches zero. Above that line you pay the ordinary 45% additional rate on the top slice, and the marginal rate drops back down.
The odd negative sign is because lost allowance is taxed as if it were income. Between £100,000 and £125,140, each extra pound is taxed at 40%; on top, you lose 50p of allowance per pound, which itself would have been tax-free — worth a further 20p of tax. That is the 60%: 40% tax + 20% allowance withdrawal (plus 2% employee National Insurance for most, though the upper earnings limit is crossed inside this band).
What it costs at every salary percentile (full-time UK, ONS ASHE 2025)
| Percentile | Gross | Income tax | NI | Take-home | Effective rate | Marginal rate |
|---|---|---|---|---|---|---|
| P10 | £23,990 | −£2,284 | −£913 | £20,793 | 9.5% | 28% |
| P20 | £27,495 | −£2,985 | −£1,194 | £23,316 | 10.9% | 28% |
| P25 | £29,262 | −£3,338 | −£1,335 | £24,589 | 11.4% | 28% |
| P30 | £30,935 | −£3,673 | −£1,469 | £25,793 | 11.9% | 28% |
| P40 | £34,779 | −£4,442 | −£1,776 | £28,561 | 12.8% | 28% |
| P50median | £39,039 | −£5,294 | −£2,117 | £31,628 | 13.6% | 28% |
| P60 | £44,203 | −£6,327 | −£2,530 | £35,346 | 14.3% | 28% |
| P70 | £50,115 | −£7,509 | −£3,003 | £39,603 | 15.0% | 28% |
| P75 | £54,009 | −£9,036 | −£3,090 | £41,883 | 16.7% | 42% |
| P80 | £59,083 | −£11,065 | −£3,192 | £44,826 | 18.7% | 42% |
| P90 | £76,903 | −£18,193 | −£3,548 | £55,162 | 23.7% | 42% |
| P95 | £99,387 | −£27,187 | −£3,998 | £68,203 | 27.4% | 42% |
| P99 | £186,840 | −£70,910 | −£5,747 | £110,184 | 38.0% | 47% |
| £100,000 | £100,000 | −£27,432 | −£4,010 | £68,558 | 27.4% | 42% |
| £110,000 | £110,000 | −£33,432 | −£4,210 | £72,358 | 30.4% | 62% |
| £120,000 | £120,000 | −£39,675 | −£4,410 | £75,915 | 33.1% | 70% |
| £125,140 | £125,140 | −£43,144 | −£4,513 | £77,483 | 34.5% | 70% |
The highlighted rows are break points inside the personal-allowance taper (between £100,000 and £125,140). Marginal rates include both income tax and employee National Insurance; ONS does not publish reliable percentiles above P90, so P95 and P99 come from the ASHE 90–99 ad hoc release and carry higher sampling error.
The punchline
Between £100,000 and £125,140, every extra £1,000 of gross pay leaves you about £600 better off — thinking of it the other way, each extra £1,000 of take-home pay costs you roughly £2,500 of gross salary. That is why salary-sacrificing the excess into a pension is dramatically more tax-efficient: it pulls your adjusted income back under the £100,000 line and restores the full allowance, saving up to 60p per sacrificed pound.
Where else this shows up on PayGrid
The interaction is built into everything else on the site: the take-home pay calculator shows marginal rates correctly through the band, the required salary calculator reveals how steeply the needed gross rises for net targets in this zone, and every salary page from £101,000 to £124,000 calls out the 60% rate explicitly.
Figures use 2026-27 HMRC rates for England, no student loan, no pension, and assume your adjusted income is your salary alone. If you also earn interest, dividends or rental income, the taper applies to your total adjusted income, which can push you into the band even with a salary below £100,000.