Quick answer
Once adjusted net income passes £100,000, your £12,570 personal allowance reduces by £1 for every £2 earned, disappearing at £125,140. This creates an effective 60% tax rate on income between those figures.
Updated October 2026 · Figures based on 2025/26 rates
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How the taper works
Each £2 over £100,000 removes £1 of allowance, so at £110,000 you have lost £5,000 of allowance and pay 40% on the lost part as well.
Why the rate is 60%
An extra £100 of income is taxed at 40%, and it also removes £50 of allowance that would have been tax-free, adding another £20 of tax.
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Ways to reduce adjusted net income
Pension contributions, Gift Aid donations and salary sacrifice arrangements can bring income back below £100,000 and restore the allowance.
Filing implications
You must file a return if income is over £100,000, so make sure pension and donation relief is claimed correctly.
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Frequently asked questions
Do pension contributions fully restore the allowance?
They reduce adjusted net income, so enough contributions can restore all or part of it.
Does it apply to both earned and investment income?
Yes. It is based on total adjusted net income.
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