Your biggest pay rise can quietly cost you the most

Between £100,000 and £125,140, the UK tax system creates one of its most punitive bands — an effective marginal income tax rate of up to 60%, plus the potential loss of valuable family benefits. The risk is that you only notice once the damage is done.

Calculate my position

60%

of every additional £1 earned in this band can be lost to tax and withdrawn allowances.

What’s hidden in the £100k trap

  • Your £12,570 personal allowance is gradually withdrawn
  • Income between £100k and £125,140 is taxed at an effective 60%
  • 30 hours free childcare can be lost — up to £10,000 per child
  • Tax-Free Childcare top-ups (£2,000 per child) are also lost
  • Frozen thresholds mean more earners are pulled in each year

At Real Wealth, we see earning as a trade of time — the one resource you can never make more of. This isn’t just about paying less tax. It’s about making sure the hours you give up are buying back something genuinely worth it: family, freedom, and the future you’re actually working towards.

– Why it hurts

Earning more does not automatically mean you’re better off.

The £100,000–£125,140 band combines a 40% higher rate with the gradual loss of your personal allowance — and for families, the disappearance of substantial childcare support. Together, they can turn a hard-earned pay rise into a step backwards.

The 60% marginal rate

For every £2 earned over £100,000, £1 of personal allowance is withdrawn — on top of 40% income tax. The result: an effective 60% rate on every pound between £100k and £125,140.

Up to £10,000 of free childcare lost

If adjusted net income exceeds £100,000, the 30 hours free childcare entitlement disappears entirely — per child. Tax-Free Childcare top-ups go too.

Fiscal drag is pulling more in

The £100,000 threshold has not moved with inflation. Each year of frozen thresholds and rising wages quietly increases the number of professionals affected — often without warning.

One of the more straightforward planning areas

For every £2 earned over £100,000, £1 of personal allowance is withdrawn — on top of 40% income tax. The result: an effective 60% rate on every pound between £100k and £125,140.

– How the calculator works

Three steps. No spreadsheet required.

01

Tell us about your income

Enter your gross salary, other taxable income (dividends, interest, rental) and current pension contributions. We’ll show your adjusted net income position and effective marginal rate immediately.

02

Explore the levers

Adjust pension contributions or salary sacrifice and watch the impact on tax, take-home, lost benefits and your retirement pot — in real time.

03

Get your personal report

When you’re ready, leave your details and download a branded PDF summarising your position and the strategies most likely to help.

– Interactive Tool

Find your true effective tax position.

Based on UK tax rules for the 2026/27 tax year. The figures are estimates for guidance only and assume employed (PAYE) income with standard Class 1 National Insurance.

Interactive tool

Find your true effective tax position.

Based on UK tax rules for the 2026/27 tax year. The figures are estimates for guidance only and assume employed (PAYE) income with standard Class 1 National Insurance.

For illustration only — not personal advice. This tool is designed to help you explore how income, pension contributions and salary sacrifice interact around the £100,000 threshold. The figures are not a recommendation and do not consider your wider circumstances. Please speak to a qualified financial planner before taking action.
Based on UK income tax rates for England, Wales and Northern Ireland (2026/27). Scottish taxpayers face different rates and bands on their non-savings, non-dividend income (i.e. salary, self-employment profits and rental income) — savings interest and dividend income are still taxed at UK rates. Please contact us for a Scottish-specific illustration.

Your income

Gross annual salary £120,000
£60k£250k
Other taxable income £0
£0£50k
Include all taxable income you receive outside your salary: bank interest, dividends, rental income, trust distributions, freelance profits, and so on. Exclude ISA income and any other genuinely tax-free income. All of this counts towards adjusted net income for the £100,000 taper. (Tax on non-employment income types is not separately modelled — see a planner for those figures.)
Number of children in eligible childcare (0 if none)
Of those, how many qualify for the disability rate? (higher Tax-Free Childcare cap)
Tax-Free Childcare is capped at £2,000 per child per year, but rises to £4,000 per child per year for a disabled child. Both amounts are lost entirely once adjusted net income exceeds £100,000.
Estimated free childcare value per child £8,000
£0£12k
Government estimates the 30-hour free childcare entitlement is worth around £6k–£10k per child per year, depending on setting and region. Tax-Free Childcare (up to £2,000 per child, or £4,000 for a disabled child) is added automatically — both disappear at £100,000 adjusted net income.

Your levers

How does your workplace pension operate?
This affects how any personal contributions receive tax relief. If unsure, ask your HR or pension provider.
Important — action needed for higher-rate taxpayers: under relief-at-source, only basic-rate (20%) tax relief is added by your pension provider. If you are a higher-rate or additional-rate taxpayer, you must record the gross value of your contributions on your Self Assessment tax return to claim the additional relief you are entitled to (up to a further 25%). Not doing so means missing out on a material portion of the tax relief available — up to 40% (higher rate) or 45% (additional rate) in total.
Pension contribution via salary sacrifice £0
£0£60k (annual allowance)
Annual allowance warning: for individuals with adjusted income above £260,000, the pension annual allowance tapers by £1 for every £2 above the threshold, potentially down to a minimum of £10,000. Please seek personal advice before contributing significant amounts.
Other personal pension contributions £0
£0£40k
Relief-at-source contributions are grossed up automatically for basic-rate relief; higher-rate relief is reflected in adjusted net income.
Other salary sacrifice (EV scheme, cycle to work, etc.) £0
£0£15k
This input assumes the sacrifice is for a tax-exempt benefit (e.g. additional pension contributions, cycle-to-work, employer childcare vouchers where available). Non-exempt arrangements (e.g. company cars, gym memberships) create a benefit-in-kind value that is added back to your taxable income and adjusted net income — this tool does not model that. Please speak to a planner if a benefit-in-kind may apply.
Also worth knowing: Gift Aid donations (grossed up) and payroll giving also reduce adjusted net income, in the same way that pension contributions do. If you make significant charitable contributions, factor this into your planning conversation.

Model a scenario

Drag the salary slider to your level — we'll show one scenario worth modelling for illustration.

Please note: modelled sacrifices reduce your take-home pay now. Pension funds are generally locked until at least age 57. Please also consider the annual allowance (£60,000, tapered for adjusted income above £260,000) and how any change fits with your wider retirement plan. For some individuals higher pension contributions may be appropriate, but they may not be suitable where liquidity needs, debt obligations, short-term savings goals or other financial priorities take precedence. This is illustrative only, not personal advice.
Net take-home
£0
After tax, NI and pension contributions
Effective marginal rate
0%
On the next £1 earned
£0
Family benefits lost

Free childcare, Tax-Free Childcare and the personal allowance are all preserved at this level.

Modelled change vs. doing nothing

Net cash take-home
£0
Available now — spendable
Pension pot gained
£0
Locked until at least age 57
Benefits retained
£0
Family childcare support kept
Combined position vs. doing nothing £0 Cash, pension and retained benefits are not directly interchangeable — pension funds are locked until at least age 57. This total is illustrative only.

Where your money goes

Detailed breakdown

ItemCurrentWith levers
Gross salary£0£0
Salary sacrifice (pension + other)£0£0
Taxable salary£0£0
Personal allowance£0£0
Income tax£0£0
Employee NI£0£0
Personal pension paid (net)£0£0
30 hours free childcare retained£0£0
Tax-Free Childcare retained£0£0
Net cash take-home£0£0
Pension pot built (gross)£0£0

Want this as a personalised report? Get a personal PDF summary of your position, the levers we modelled and the planning options most relevant to you.

Book a conversation

Real Wealth Partners uses the information you provide solely to send your report and to make contact about relevant planning options. We never sell or share your data. Read our privacy notice.

– Beyond the numbers

Areas worth a conversation.

The calculator can only reflect the figures you enter. The questions below often surface planning opportunities the tool cannot see — and they are the kinds of areas a Real Wealth financial planner would explore with you.

Does your employer offer salary exchange (also known as salary sacrifice) as a way to make pension contributions?

Do you know what fees you are paying on your existing pensions, and how they compare to the market?

Are your pensions invested in a way that reflects your objectives, your timescale and your appetite for risk?

Is your workplace pension operated on a relief-at-source, net-pay or salary sacrifice basis?

Are you a Scottish taxpayer, or likely to become one — where different income tax rates and thresholds apply?

Is your adjusted income likely to exceed £260,000 in the tax year, which may reduce your pension annual allowance?

Do you have flexibility over when a bonus, dividend or other variable income is paid, and could it be timed differently?

Is your household eligible for Tax-Free Childcare or the 30 hours free childcare entitlement — and is anyone in the household close to the £100,000 threshold?

– Ready when you are

Speak to a Real Wealth financial planner

Thinking about increasing your pension contributions, restructuring salary sacrifice, or planning a bonus more carefully? A 30-minute conversation with one of our regulated planners will tell you what’s worth doing — and what isn’t — for your specific position. No obligation, no jargon, no pressure to proceed.

Book a conversation

Or call us directly

0161 768 7722

Real Wealth Partners uses the information you provide solely to send your report and to make contact about relevant planning options. We never sell or share your data. Read our privacy notice.