If you earn between £100,000 and £125,140, you could be paying a hidden
60% income tax rate — more than someone earning £150,000. Here is
everything you need to know, and how to avoid it.
Hidden tax rate
Kept per £1 earned
Taxpayers affected (2025/26)
Everyone in the UK receives a £12,570 tax-free Personal Allowance. But once your income exceeds £100,000, HMRC withdraws that allowance at a rate of £1 for every £2 you earn above the threshold. By the time you reach £125,140 your entire allowance has been removed.
This withdrawal is not labelled as a tax rate, but mathematically it creates an effective 60% income tax charge on every pound earned inside that band. Add 2% National Insurance and you keep just 38 pence from each additional pound — less than a higher-rate taxpayer at £90,000 or an additional-rate taxpayer at £150,000.
HMRC data confirms that almost 725,000 workers now fall squarely within this band in 2025/26, with 1.95 million losing some or all of their Personal Allowance. That figure is projected to reach 2.29 million by 2028/29.
Your tax-free allowance evaporates as income crosses £100,000
For every £2 you earn above £100,000, you lose £1 of your Personal Allowance. At £125,140 the entire £12,570 allowance has been withdrawn, resulting in an effective 60% marginal tax rate across the entire band.
It is not just the 60% rate. Crossing £100k triggers a cascade of additional losses.
In England, 30 funded hours from age 9 months. In Wales, up to 30 hours for 3-4 year-olds only. Both are lost entirely at £100k — no taper, a cliff edge.
Per child, per year. Earn £100,001 and the entire entitlement is removed for your family — with no gradual reduction.
60% income tax plus 2% National Insurance — before student loan repayments are taken into account, which push it higher still.
A consultant with a £100,000 base salary takes on £10,000 in extra locum work.
You keep less at £110,000 than someone earning £150,000. That is the trap.
Tax thresholds have been frozen since 2021 and will remain so until at least April 2031.
Meanwhile, salaries keep rising.
Taxpayers losing some or all of their Personal Allowance (Source: HMRC via Rathbones FOI, Nov 2025)
Practical, HMRC-compliant ways to reduce your Adjusted Net Income below £100,000.
Royal College fees, GMC registration, MDU/MPS subscriptions, and exam costs all reduce your taxable income directly.
Standard NHS pension contributions are fixed by tier, but AVCs or Additional Pension purchases reduce your Adjusted Net Income.
Additional contributions to a personal pension attract 60% effective tax relief inside the trap zone — the highest rate in the UK tax system.
Charitable donations reduce your income pound-for-pound and benefit your community at the same time.
Exchange salary for a car lease, cycle-to-work scheme, or other benefits to lower gross pay. Note: not available for NHS pension contributions.
Restructure savings and investment income so neither partner crosses the £100,000 threshold unnecessarily.
That additional shift may cost you more in lost allowances and benefits than the gross income it generates.
Your standard NHS pension contributions already reduce your Adjusted Net Income automatically. You can make Additional Voluntary Contributions to push your income below £100,000 and reclaim every penny of your Personal Allowance.
Tax relief at 60% inside the trap zone is the highest available anywhere in the UK tax system. Your pension is also protected from creditors and grows entirely tax-free.
The number that determines whether you are caught in the trap.
| Component | Amount |
|---|---|
| Gross taxable income (salary, locums, CEAs, dividends) | £115,000 |
| Less: pension contributions (relief at source) | -£10,000 |
| Less: Gift Aid donations (grossed up) | -£2,500 |
| Less: allowable professional expenses | -£1,200 |
| Adjusted Net Income | £101,300 |
| Just £1,300 more in pension contributions would bring this below £100,000 - reclaiming the full £12,570 Personal Allowance. | |
