If you earn between £100,000 and £125,140, every extra pound is effectively taxed at 60% — even though no tax band anywhere shows a 60% rate.
In Scotland it is worse. The equivalent band is taxed at an effective 67.5%.
Income tax and National Insurance combined, England & Wales. The spike reaches 62% where the personal allowance is withdrawn.
Why it happens
Your Personal Allowance is £12,570. Above £100,000 of income it is withdrawn at £1 for every £2 you earn, reaching nil at £125,140.
So an extra £100 of salary in this band does two things at once. The £100 is taxed at 40%, costing £40. And your allowance falls by £50, which means £50 that was previously tax free is now taxed at 40%, costing another £20.
Total: £60 of tax on £100 of extra earnings. A 60% marginal rate.
Add 2% National Insurance and the real figure is 62%.
The Scottish version
Scotland’s advanced rate of 45% applies across this band, so the same mechanism produces:
- £100 taxed at 45% = £45
- £50 of allowance lost, taxed at 45% = £22.50
That is £67.50 on £100, a 67.5% marginal rate — 69.5% including National Insurance.
The odd shape it creates
The tax system is normally progressive: each band is taxed more heavily than the last. This band breaks that pattern.
| Income band (rest of UK) | Marginal rate including NI |
|---|---|
| £12,570 to £50,270 | 28% |
| £50,270 to £100,000 | 42% |
| £100,000 to £125,140 | 62% |
| Above £125,140 | 47% |
Someone earning £120,000 faces a higher marginal rate than someone earning £200,000. That is not a mistake in the table.
See what this looks like on your salary
The bonus problem
The trap is at its most painful with bonuses. A £110,000 earner receiving a £15,000 bonus keeps about £5,700 of it after tax and National Insurance — the rest disappears into the allowance withdrawal.
Worse, a bonus can push someone from below £100,000 to above it, dragging their whole allowance into the taper for a year.
What you can do
Pension contributions are unusually effective here. A contribution reduces your adjusted net income, which is what the taper is measured against. Contribute £10,000 when earning £110,000 and you get 40% relief on the contribution and restore £5,000 of Personal Allowance — an effective 60% relief. Nowhere else in the tax system offers that.
The annual allowance is normally £60,000, and unused allowance from the previous three tax years can sometimes be carried forward. High earners may face a tapered annual allowance, which is a separate calculation.
Salary sacrifice goes further, because it reduces National Insurance as well.
Gift Aid donations also extend your basic rate band and reduce adjusted net income, producing a similar effect.
Bonus sacrifice. Some employers allow a bonus to be paid directly into a pension. If a bonus would push you into the taper, this can be worth far more than the cash.
Timing. Where you have any control over when income falls, spreading it across tax years to stay under £100,000 in each avoids the taper entirely.
Adjusted net income
The taper is measured against adjusted net income, not gross salary. That means:
- Salary, bonuses and benefits in kind count
- Rental and dividend income count
- Pension contributions are deducted
- Gift Aid donations are deducted
So someone on a £98,000 salary with a company car may be over £100,000 once the benefit is counted, without realising it.
The other trap at £100,000
If you have children in England and use funded childcare or a Tax-Free Childcare account, both are lost entirely once either parent’s adjusted net income exceeds £100,000.
This is a cliff edge, not a taper. One pound over and the whole entitlement goes.
For a family using significant childcare, the combined effect of losing it alongside the 60% band can mean an effective marginal rate well over 100% — a pay rise that leaves you worse off. It is one of the few situations in the UK system where earning more genuinely costs money, and pension contributions to stay under £100,000 can be worth thousands.
Sources
- Income over £100,000 — GOV.UK
- Income Tax rates and Personal Allowances — GOV.UK
- Scottish Income Tax rates and bands 2026 to 2027 — Scottish Government
Checked against source on 30 August 2026. This is general guidance, not financial advice. Pension and tax planning at this level is worth discussing with a qualified adviser.
Written by Nathan Cole
I built the calculators on HoursHQ and check every statutory figure against GOV.UK, Acas and the legislation itself before it goes live. Where the law is genuinely unclear, I say so rather than guessing.