05/05/2026
Are you a high-earner making over £100k per year? 💸
You may be paying more tax than necessary due to a quirk in the UK tax system.
It is called the £100,000 tax trap, and it works like this:
Most UK taxpayers receive a Personal Allowance of £12,570 free from income tax. Once your adjusted net income exceeds £100,000, HMRC to take away £1 of that allowance for every £2 earned above the threshold. By the time you're earning £125,140, your tax-free personal allowance is gone.
Because you are already paying 40% higher-rate tax on income in this band, the loss of the allowance adds a further 20% effective rate on top. This means you could be paying an effective 60% marginal tax rate.
Some ways to tell if you've landed in the 100k tax trap include:
👉 A salary increase or bonus pushes annual income just over £100,000
👉 Dividend income from a limited company takes the total above the threshold
👉 A tax code changes mid-year with no clear explanation
👉 A Self-Assessment return comes back larger than expected
👉 Child Benefit starts reducing or stops altogether
👉 A colleague or your accountant tells you about the tax trap
Wages have been increasing in line with inflation, but the £100,000 threshold and tax bands have not been changed to reflect that, meaning more people get caught each year without realising.
The good news is that you can reduce the impact of the £100k tax trap with careful financial planning. The earlier you get in touch, the better.
If your income is approaching or has crossed £100,000, we can help.
📖 Read our full guide to the £100k trap on our website: www.anyaccounting.co.uk/the-100000-tax-trap-are-you-paying-60-tax-without-knowing-it/
Or get in touch 👇
🌐 www.anyaccounting.co.uk/contact/
📧 [email protected]
