What happens to the personal allowance above £100,000?
The £12,570 personal allowance falls by £1 for every £2 of adjusted net income above £100,000 and is zero from £125,140. Inside that band in 2026/27, the next £1,000 of salary costs £600 in income tax and £20 in National Insurance, a marginal rate of 62% against 42% below the band and 47% above it.
How the taper works
The allowance is the slice of income taxed at 0%. Once adjusted net income passes £100,000, each extra £2 removes £1 of it. The table follows a salary across the band, for England and Northern Ireland with no pension or student loan. The last column is the share of the next £1,000 of pay that goes in income tax and National Insurance.
| Salary | Allowance left | Income tax | Take-home | Marginal rate |
|---|---|---|---|---|
| £90,000 | £12,570 | £23,432 | £62,757 | 42% |
| £100,000 | £12,570 | £27,432 | £68,557 | 62% |
| £105,000 | £10,070 | £30,432 | £70,457 | 62% |
| £110,000 | £7,570 | £33,432 | £72,357 | 62% |
| £120,000 | £2,570 | £39,432 | £76,157 | 62% |
| £125,140 | £0 | £42,516 | £78,111 | 47% |
| £135,140 | £0 | £47,016 | £83,411 | 47% |
Where the marginal rate comes from
Take a salary of £110,000 and add £1,000.
- The extra pay is taxed at the higher rate: £1,000 × 40% = £400.
- The allowance shrinks by £500, so that much income moves from 0% to the higher rate: £500 × 40% = £200.
- Income tax rises by £600, which is 60% of the extra pay.
- National Insurance adds £20, bringing the total to 62%.
In Scotland the same taper applies to the Scottish bands, and the engine gives a marginal rate of 69.5% on the next £1,000 at £110,000.
Where it ends
At £125,140 the allowance has reached zero and there is nothing left to withdraw. That is also where the additional rate of 45% starts in England, Wales and Northern Ireland, so the marginal rate drops to 47% from that point on. gov.uk puts it this way: there is no personal allowance on taxable income over £125,140.
What a pension contribution does to adjusted net income
The taper is measured on adjusted net income, not on salary. gov.uk defines it as total taxable income before allowances, less certain reliefs: trading losses, Gift Aid donations (the grossed-up amount), pension contributions paid gross, and pension contributions where the provider has already added basic rate relief (again the grossed-up amount).
The arithmetic for a salary of £110,000 and a gross pension contribution of £10,000: £110,000 − £10,000 = £100,000 of adjusted net income, which is not above £100,000, so the allowance is £12,570 where it was £7,570.
| Method | Adjusted net income | Allowance | Income tax | Take-home |
|---|---|---|---|---|
| No contribution | £110,000 | £7,570 | £33,432 | £72,357 |
| Salary sacrifice | £100,000 | £12,570 | £27,432 | £68,557 |
| Net pay | £100,000 | £12,570 | £27,432 | £68,357 |
| Relief at source | £100,000 | £12,570 | £29,432 | £68,357 |
Under salary sacrifice £10,000 goes into the pension and take-home falls by £3,800. Under relief at source £8,000 leaves pay and the provider adds £2,000; the income tax column is higher than in the rows above because that basic rate relief goes into the pension instead of coming off the tax. gov.uk says relief above the basic rate is claimed from HMRC under relief at source, and the table assumes it has been. These rows are arithmetic, not a suggestion.
Sources
The gov.uk pages this guide relied on, read on 9 November 2026.
- Income Tax rates and Personal Allowances
- Personal Allowances: adjusted net income
- Tax on your private pension contributions: tax relief
- Income Tax in Scotland: current rates
The figures are computed when the site is built from the rules file for 2026/27. Status: in force. Each value, its source and the date it was checked: rates for 2026/27.