How does the Personal Allowance taper work above £100,000?
By Katharine, Founder, EMBR Tax
Last updated for the 2026/27 tax year · 12 July 2026
What is the Personal Allowance taper?
Above £100,000 of adjusted net income, HMRC removes £1 of your £12,570 Personal Allowance for every £2 of income — so the allowance is gone entirely at £125,140 (2026/27). Because you pay 40% tax on the extra income and lose tax-free allowance at the same time, income in this band is effectively taxed at around 60%.
In practice: of every extra £1,000 you earn between £100,000 and £125,140, you keep roughly £400 after Income Tax — before National Insurance is even counted.
HMRC reduces your Personal Allowance by £1 for every £2 of adjusted net income above £100,000. That means the allowance fades away gradually rather than disappearing in one go.
Why does the taper catch people out?
- People focus on salary, not adjusted net income
- Bonuses and other income can move them into the taper without warning
- They underestimate how valuable it can be to reduce adjusted net income back down
What can help reduce the effect of the taper?
This is why pension contributions, Gift Aid, and some employer arrangements often come into the conversation. They may help reduce adjusted net income and soften the taper effect.
What is the bottom line?
The taper is not just a technical rule. It is one of the main reasons the £100,000 area needs careful planning. If you are near it, checking adjusted net income properly can make a real difference.
Frequently asked questions
How does the Personal Allowance taper work?+
HMRC reduces your Personal Allowance by £1 for every £2 of adjusted net income above £100,000. That means the allowance fades away gradually rather than disappearing in one go.
Why do people get caught out by the taper?+
People often focus on salary rather than adjusted net income. Bonuses and other income can move someone into the taper without warning, and many underestimate how valuable it can be to reduce adjusted net income back down.
What can reduce the effect of the taper?+
Pension contributions, Gift Aid, and some employer arrangements may help reduce adjusted net income and soften the taper effect.
Related guides
- What is adjusted net income, and why does it matter for your tax and childcare?
Adjusted net income explained: what counts, what can reduce it, and why it affects your tax, Personal Allowance, and childcare support.
- How can pension contributions reduce your adjusted net income for HMRC purposes?
Pension contributions can reduce adjusted net income for HMRC. Learn how net pay, relief at source, and salary sacrifice each affect the calculation.
- What should you do if your income looks likely to go just over £100,000?
Just over £100,000 can be costly. A practical checklist covering adjusted net income, pensions, Gift Aid, and bonuses to review before the year ends.