For UK taxpayers with income between £100,000 and £125,140, the headline 40% higher rate understates the real cost of every extra pound earned. In that band the personal allowance is being withdrawn as income rises, and the withdrawn portion is itself taxed at 40%. Combine the two and the effective marginal rate on income in the band is 60%. It is one of the most distinctive features of the UK income tax system, and it is also one of the most reliably mitigable, because pension contributions and Gift Aid donations both reduce the adjusted net income figure on which the taper is calculated.
This piece walks the mechanics of the taper, the precise band it applies to, the planning moves that step a taxpayer back below the £100,000 line, and the practical points high earners report most often. It sits in [the high-earner planning hub](/guide/high-earner-tax-planning-60-percent-trap/) alongside the sibling spoke on [dividend tax rates and remuneration mix](/blog/dividend-tax-rates-allowances-remuneration/) and the foundational piece on [the tax-free allowances that reduce a Self-Assessment bill](/blog/tax-free-allowances-personal-to-trading-allowance/).
The personal allowance and where the taper starts
Every UK taxpayer is in principle entitled to a personal allowance, the slice of income taxed at 0%. For 2025-26 it stands at £12,570. The allowance is given automatically through the PAYE code for employees and pensioners and applied in the Self-Assessment calculation for those who file a return. Once adjusted net income climbs above £100,000, however, the allowance starts to be withdrawn. For every £2 of income above £100,000, £1 of personal allowance is taken away. By the time income reaches £125,140, the allowance has been withdrawn entirely.
The figure that matters for the taper is adjusted net income rather than gross income or taxable income. Adjusted net income broadly means total taxable income less specific reliefs such as personal pension contributions made net of basic-rate relief (grossed up) and Gift Aid donations (grossed up). That definition is the reason pension contributions and Gift Aid are the headline planning levers, because they reduce the very figure that triggers the taper.
Why the effective rate is 60% in the taper band
In the taper band, two effects stack on the same extra pound of income. The first is the 40% higher-rate income tax on that pound itself. The second is the withdrawal of 50p of personal allowance, which is now taxed at 40% rather than sheltered at 0%, costing another 20p. Add the 40p of tax on the pound earned to the 20p of tax on the lost allowance and the total cost of the marginal pound is 60p. The effective marginal rate is 60% across the whole £100,000 to £125,140 band, where it then drops back to the 40% headline (and eventually to 45% above £125,140 where the additional rate cuts in).
| Income band (2025-26) | Headline rate | Personal allowance position | Effective marginal rate |
|---|---|---|---|
| £12,570 - £50,270 | 20% basic | Full | 20% |
| £50,270 - £100,000 | 40% higher | Full | 40% |
| £100,000 - £125,140 | 40% higher | Tapering from £12,570 to nil | 60% |
| £125,140 - £150,000 | 40% higher | Nil | 40% |
| Above £125,140 | 45% additional | Nil | 45% |
What counts as adjusted net income
Adjusted net income is the figure the taper uses, and getting comfortable with it is the foundation of the planning. It starts with total income for the year (employment, self-employment, rental, dividends, savings interest, pensions), allows trading losses and certain other reliefs against income, and then deducts the gross amount of personal pension contributions and Gift Aid donations. The deduction is the gross amount, not the net cash, so a £8,000 net pension contribution is treated as a £10,000 gross deduction for adjusted net income purposes.
The reason adjusted net income matters here is exactly the reason it matters for the High Income Child Benefit Charge and a handful of other thresholds. HMRC chose a single tax-policy concept (income net of certain reliefs) to test multiple thresholds, so a single pension contribution can simultaneously restore personal allowance, reduce or eliminate HICBC, and qualify for tax relief in its own right. High earners modelling the year are really modelling adjusted net income, not gross salary.
Worked example: a £115,000 earner before and after a pension contribution
A taxpayer with £115,000 of adjusted net income sits squarely in the taper band. The personal allowance is reduced by £7,500 (half of the £15,000 excess over £100,000), leaving £5,070 of allowance. If the taxpayer makes a £12,000 gross personal pension contribution (£9,600 net of basic-rate relief), adjusted net income falls to £103,000. The allowance now reduces by only £1,500, leaving £11,070. The change has restored £6,000 of personal allowance, on top of the higher-rate tax relief on the pension contribution itself. Step the contribution up to £15,000 gross and adjusted net income hits exactly £100,000, restoring the full £12,570 allowance and stepping out of the taper band entirely.
The standard moves to step out of the taper
The mitigations all work by reducing adjusted net income to or below £100,000 (or, more modestly, to a lower point within the taper). The shortlist is short by design: this is one of the most well-understood corners of UK tax planning, and the available levers are stable from year to year. The choice is more about which lever suits the taxpayer's circumstances than about discovering a new one.
- Personal pension contributions: every £1 of gross contribution reduces adjusted net income by £1, restoring personal allowance proportionately and attracting higher-rate relief through Self-Assessment.
- Salary sacrifice into a workplace pension: where the employer offers it, this reduces gross salary directly, with the side benefit of saving employee and employer National Insurance.
- Gift Aid donations: a £100 cash donation grosses up to £125, reducing adjusted net income by £125. The taxpayer also claims the higher-rate relief through Self-Assessment.
- EIS investment: subject to the qualifying conditions, an EIS subscription attracts 30% income tax relief; the contribution itself does not reduce adjusted net income for taper purposes, but combined with the wider package it shapes the tax bill.
- Timing of bonuses or dividends: where the taxpayer has any control over when income is recognised, deferring income into a year with lower headline figures (or accelerating into a year already above the taper band) can move the relevant pounds out of the 60% slice.
Pension contributions, the annual allowance, and tapering
Pension contributions are the single most effective taper mitigation for most high earners, but they sit within their own set of rules. The standard annual allowance for pension contributions is currently £60,000 across personal and employer contributions, and unused allowance from the prior three tax years can be carried forward subject to membership of a registered pension scheme in those years. For very high earners (broadly with threshold income above £200,000 and adjusted income above £260,000), the annual allowance is itself tapered down to a minimum, which restricts the size of contribution that attracts tax relief.
In practical terms, most taxpayers in the £100,000 to £125,140 taper band sit well below the pensions tapering thresholds and have full access to the standard annual allowance, possibly with carry-forward room on top. The pension contribution that restores personal allowance is usually well within those limits. Above £200,000 of income, the planning becomes more delicate because the pensions taper begins to bite, and the modelling should look at both income tax taper and pensions taper together.
Gift Aid, the second cleanest lever
Gift Aid donations to UK charities reduce adjusted net income by the gross amount of the donation. A £1,000 net cash donation grosses up to £1,250 once the charity reclaims basic-rate tax. The higher-rate or additional-rate taxpayer claims the difference between their marginal rate and basic rate through Self-Assessment, and the £1,250 grossed-up amount reduces adjusted net income for the taper. For taxpayers who already give to charity, ensuring the donations are made under Gift Aid and reported on the return is a simple and material planning step. For those who do not already give, Gift Aid does not turn a donation into a profit, but it does mean the after-tax cost of a charitable gift is lower than the headline net cash amount, while also delivering the taper-relief benefit.
Salary sacrifice and the NI side effect
Where an employer offers salary sacrifice into a workplace pension, the mechanism is particularly clean for a high earner in the taper band. The sacrificed salary is removed at source from PAYE, so gross income for the year is lower and adjusted net income falls without any need to claim additional relief through Self-Assessment. Both employee and employer National Insurance is also saved on the sacrificed amount, and many employers pass at least part of the employer NI saving back into the pension contribution, increasing the value further. The mechanism is only as good as the employer scheme, however, and not every employer offers it for all employees, so the first step is to check the workplace policy in detail.
Where the taper interacts with HICBC
A taxpayer in the £100,000 to £125,140 band who also receives Child Benefit (or whose partner does) faces the High Income Child Benefit Charge as well as the taper. Both regimes use adjusted net income, so a pension contribution or Gift Aid donation that brings adjusted net income back below £100,000 simultaneously eliminates the taper and reduces or eliminates HICBC. For households with children, the combined effective marginal rate in the taper band can exceed 60% once HICBC is factored in, which is why modelling the two regimes together is so valuable. The same pound contributed to pension may save 60p of income tax and a meaningful additional amount of HICBC, depending on the number of children and Child Benefit received.
Self-Assessment is where the relief is captured
Higher-rate and additional-rate pension tax relief, Gift Aid higher-rate relief, and the effective recovery of personal allowance through reduced adjusted net income all run through Self-Assessment. PAYE coding alone does not capture the relief unless HMRC has been notified and adjusted the code. A taxpayer who pays into a personal pension but does not declare the contribution on the return effectively gives up the higher-rate slice of relief, which for a £15,000 gross contribution is around £3,000 of tax.
I will only briefly be in the taper band. Is the planning still worth it?
Even a single tax year in the taper band can justify a modest pension top-up or Gift Aid donation if the taxpayer was minded to make either anyway. The marginal cost of a £10,000 gross pension contribution for a taxpayer with £110,000 of adjusted net income is materially below the headline £10,000, once the higher-rate relief and the restored personal allowance are added together. A short-term spike in income is often the easiest year in which to make a pension top-up, because the relief is largest and the long-term outcome is genuinely valuable.
My income fluctuates. How do I plan around the taper?
For owner-managers, contractors, and others with controllable income, the planning is partly about smoothing income across tax years rather than letting it spike in one and trough in the next. A year of £125,000 followed by a year of £75,000 attracts more total tax than two years of £100,000 each, because the £125,000 year spent the £100,000 to £125,140 slice at the 60% effective rate while the £75,000 year wasted lower-rate band. Where dividends, bonuses, or invoice timing can be moved between years within commercial limits, levelling the income profile is a legitimate planning move that does not depend on a specific relief at all.
Does Scotland have the same taper?
Yes. The personal allowance and the taper above £100,000 are set at the UK level and apply across the United Kingdom, including Scotland and Wales. The headline tax rates above the personal allowance differ in Scotland under devolved tax powers, but the £100,000 to £125,140 personal allowance taper applies to Scottish taxpayers in the same way, with the same mechanism and the same mitigations.
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Self Assessment Accountants in HarrowThis article reflects current HMRC guidance as of April 2026. Key references: HMRC Self Assessment overview, HMRC SA returns collection. Tax rules change annually. Always verify deadlines and thresholds at gov.uk or with a qualified accountant.
Our editorial team includes ACCA-qualified accountants and tax writers with experience across self-employment, rental income, and HMRC compliance. All articles are reviewed annually against current HMRC guidance and updated where rules change.