Once you cross £100,000, HMRC starts clawing back your personal allowance at £1 for every £2 you earn. Add 40% income tax and 2% National Insurance on top of that and every extra pound in this band actually costs you 60p. Three real salaries below show the damage, and the pension number that gets you out of it.
Salary
£110,000
Above £100k
£10,000
Of which £3,800 goes to HMRC
The escape
Salary-sacrifice £10,000 into your pension and the trap stops biting. You give up £3,800 of take-home, but the full £10,000 lands in your pension pot.
Salary
£120,000
Above £100k
£20,000
Of which £7,600 goes to HMRC
The escape
Salary-sacrifice £20,000 into your pension and the trap stops biting. You give up £7,600 of take-home, but the full £20,000 lands in your pension pot.
Salary
£125,140
Above £100k
£25,140
Of which £9,553 goes to HMRC
The escape
Salary-sacrifice £25,140 into your pension and the trap stops biting. You give up £9,553 of take-home, but the full £25,140 lands in your pension pot.
Numbers come from the Afterax tax engine for 2026/27 in England, Wales and Northern Ireland. Scotland has the same trap mechanic on a different higher-rate band.
Your escape
Drag the salary slider. Everything below recomputes in your browser against HMRC's 2026/27 rates, and shows you the exact salary-sacrifice contribution that drops your adjusted net income back down to £100,000.
What you lose
£7,600
Out of the £20,000 you earn above £100k
Effective rate
62.0%
Tax, NI and lost personal allowance combined
Pension pot if you escape
£20,000
Real cash cost: only £7,600
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For most people, UK income tax has three rates. 20% on income up to £50,270, 40% on anything between there and £125,140, then 45% above that. What nobody tells you is that a fourth rate hides between £100,000 and £125,140.
The £12,570 personal allowance is normally tax-free. Cross £100,000 and it starts shrinking by £1 for every £2 you earn over the threshold. By £125,140 it's gone entirely. The cruel bit is that the allowance you lose then gets taxed at 40%, on top of the 40% you already owe on the pound that triggered the loss. The arithmetic comes out at 60%, or closer to 62% once you add 2% employee NI.
Salary sacrifice into a pension is the only clean way out. It reduces your gross pay before tax is calculated, which lowers your adjusted net income, which gives you your personal allowance back. Sacrifice exactly enough to land at £100,000 and the trap stops biting. The sacrificed money goes to your pension instead of HMRC.
The long version of this story, including the employer NI angle and the cliff effects on childcare allowances, lives in the full guide. Want to see the difference two pension contribution levels make? Open /compare and slide between them.
Sources & last reviewed
Updated for 2026/27 · last reviewed 29 April 2026 · view changelog →
Bands, thresholds and reliefs on this page come directly from the following official sources. Tax rates are checked against these references whenever a Budget or in-year change is announced.