Above £100,000 your Personal Allowance is withdrawn £1 per £2 earned. At £125,140 it is gone. How to reclaim it with pension contributions.
| Adjusted Net Income | Personal Allowance | Tax Paid on Excess |
|---|---|---|
| Up to £100,000 | £12,570 (full) | — |
| £105,000 | £10,070 | 60% effective rate |
| £110,000 | £7,570 | 60% effective rate |
| £115,000 | £5,070 | 60% effective rate |
| £120,000 | £2,570 | 60% effective rate |
| £125,140+ | £0 | 45% additional rate |
Salary sacrifice is most powerful — reduces adjusted net income pound-for-pound and saves income tax plus NI. Personal pension contributions work the same way but without the NI saving. Gift Aid donations reduce adjusted net income at the grossed-up value. Combination of all three is the most efficient strategy for high earners.
Income above £100,000 requires a Self Assessment tax return even if all tax is paid through PAYE. Failure to register incurs penalties. The return is how HMRC calculates the exact Personal Allowance withdrawal and any additional tax due or repayable.
The £100,000 boundary coincides with the 30-hours free childcare cutoff (for parents) and sits above the £80,000 HICBC threshold. Planning salary sacrifice to hit £100,000 exactly from £125,000 or above saves income tax, NI, can restore Child Benefit, and may preserve childcare entitlements — potentially £5,000 to £15,000 in combined annual benefits.
When does the Personal Allowance taper start?
At £100,000 of adjusted net income. For every £2 above this, £1 of Personal Allowance is removed. At £125,140 the Personal Allowance reaches zero.
What is adjusted net income?
Gross income minus pension contributions (salary sacrifice or personal contributions via relief at source) and Gift Aid donations. This is what HMRC uses to calculate PA withdrawal — not your PAYE salary.
Do Gift Aid donations help?
Yes — each £1 of Gift Aid donation (at the gross value including HMRC top-up) reduces adjusted net income. Less efficient than salary sacrifice as no NI saving, but still restores Personal Allowance.
Free, accurate, 2026-27 rates. Scotland and tax code supported.