First, what actually happens at £100,000

Every taxpayer in Britain starts with a personal allowance, the slice of income that carries no tax at all, set at £12,570 for 2026/27. It applies to everyone right up to the point where earnings pass £100,000, and from there it begins to shrink.

The rule is simple: each £2 of income above £100,000 removes £1 of allowance. Reach £125,140 and the whole £12,570 has been taken back, leaving you taxed on the very first pound you earn.

That withdrawal is what people call the trap, and the arithmetic behind the 60% figure runs like this:

• On earnings above £100,000, you're already paying 40% income tax (higher rate)
• The personal allowance withdrawal means you're also losing £0.50 of allowance for every extra £1 earned
• That lost allowance was protecting £0.50 from 40% tax = 20p of additional tax
• Total: 40p from higher rate + 20p from allowance withdrawal = 60p per £1 earned

What the numbers look like in practice

Picture three senior software engineers working in Britain:

Look closely at the step from £95,000 to £112,570. Gross pay rises by £17,570, yet only £6,462 of it ever reaches the bank account, which works out at 36.8 pence in the pound across that stretch. Parts of it are taxed at the full 60p.

Here is a sharper illustration. A rise from £100,000 to £103,000 adds £3,000 on paper. Once the 60% effect has done its work, £1,200 a year survives. The manager who signed it off believes they handed over another £250 a month; what landed was £100.

Who gets caught in this trap?

Far more people sit in this band than most would guess, and in London the list of usual suspects between £100k and £125k includes:

• Mid-career city solicitors (3-5 PQE at Silver Circle or Magic Circle firms)
• Senior software engineers at product companies and scale-ups
• NHS consultants at entry to mid scale
• Finance professionals: VPs at investment banks, senior managers at Big Four
• Senior civil servants (Grade 6-7 in some departments)
• Experienced GPs on the higher end of the BMA salaried scale

Not an exotic list. Plenty of employers set pay in this range without ever considering what the employee is left holding at the end of it.

The legal way out: pension salary sacrifice

Here is the part where decent advice pays for itself many times over. The standard response is to push pension contributions high enough that adjusted net income falls back under £100,000.

Say your salary is £115,000 and you want the allowance back. Taxable income has to drop by £30,000 in allowance terms (£30,000 x 50p restores £15,000 of allowance, and recovering the full £12,570 means getting income down to £100,000). A pension contribution of £15,000 takes adjusted net income to £100,000 and hands the allowance back in full.

Tax saved on that £15,000 contribution comes to roughly £9,000, thanks to the 60% rate on that band. Cash take-home falls by £6,000 a year, or £500 a month, while £15,000 lands in the pension. In other words £15,000 of retirement saving costs £6,000 of spending money, a return of about 250% on the cash given up, and that is before a penny of investment growth.

Advisers routinely call this the single sharpest bit of tax planning available in Britain, for the simple reason that the 60% band inflates the saving so dramatically.

Childcare and the additional twist

Parents face an extra complication. Tax-Free Childcare, worth up to £2,000 a year for each child, requires that both parents keep adjusted net income under £100,000. A single pound over and the entire family loses the scheme. There is no taper, just a wall.

Two children in nursery makes that wall expensive: about £4,000 a year gone at the threshold. Stack it on top of the disappearing allowance and the marginal rate on income between £99,000 and £101,000 can climb past 60% for those households. For that narrow group, £100,000 is a genuinely dangerous number.

Self-assessment: don't get caught out

Earn above £100,000 under PAYE and your code has probably been amended already, though it pays to look. HMRC is supposed to strip out the allowance once you cross £125,140, but a mid-year rise often means the change arrives late.

Anyone past £100,000 ought to be filing a self-assessment return annually. If you are uncertain whether the requirement covers you, assume it does.

One final thing worth knowing

Both the £125,140 ceiling and the £12,570 allowance have been held still. While wages keep climbing, that freeze pulls fresh people into the band every year without anyone receiving a real pay increase. Fiscal drag is the usual name for it, and it explains a good part of the growing queue of taxpayers filing returns and discovering how the effective rate structure really works.

What makes it worse is that nobody ever legislated a 60% band. It fell out of the maths when the allowance taper arrived in 2010, and more than a decade on it is still quietly there, catching a wider group each year.