The £100k “tax trap” is really the Personal Allowance taper. Once adjusted net income goes above £100,000, HMRC reduces Personal Allowance by £1 for every £2 over the line until it reaches £0 at £125,140.
Adjusted Net Income (ANI) is the HMRC figure behind these threshold checks
Adjusted Net Income (ANI) starts with your taxable income, then takes off certain reliefs such as qualifying pension contributions and Gift Aid. It is the figure HMRC uses for rules such as the High Income Child Benefit Charge, Tax-Free Childcare and the £100,000 Personal Allowance taper.
Worked examples
These examples answer the practical question most readers care about: whether they stay below the taper, fall into it, or pull themselves back out of it.
ANI £99,500
Full Personal Allowance usually kept. If ANI stays below £100,000, the taper has not started.
Why it matters: being just under the line keeps the position much simpler.
ANI £104,000
About £2,000 of Personal Allowance lost. HMRC cuts the allowance by £1 for every £2 above £100,000.
Why it matters: the extra tax feeling in this band comes from the shrinking allowance, not a special extra tax rate.
ANI £108,000 with an £8,000 gross pension
ANI can fall back to around £100,000. A qualifying pension contribution can remove the taper issue altogether.
Why it matters: pension is one of the main practical levers near this threshold.
Salary below £100k, bonus pushes ANI over
The taper can still bite. A bonus, taxable benefits or other taxable income can move ANI above the line even if base salary does not.
Why it matters: “my salary is under £100k” is not always the end of the story.
Why the £100k band feels expensive
This page is here to translate a technical rule into the plain-English question most people ask: why does income above £100,000 feel so tax-heavy?
The pain point is the allowance taper, not a separate named tax
People often call this the “£100k tax trap” because extra income can lead to more tax than expected once Personal Allowance starts shrinking. The mechanism is simple: ANI above £100,000 gradually erodes the allowance.
Check how far above £100,000 your ANI really is
If you are only a little over the line, the planning question is often whether pension contributions or Gift Aid can bring ANI back down enough to keep more or all of the allowance.
What can push you into the taper
- Bonuses and taxable benefits
- Other taxable income on top of salary
- Using salary instead of ANI
What can pull you back out
- Qualifying gross pension contributions
- Grossed-up Gift Aid donations
- Checking all income and reliefs properly
What people often miss
These are the common misunderstandings that make the £100k pages feel harder than they need to be.
Treating £100k as a salary-only rule
The threshold uses adjusted net income, not just salary. Benefits, bonuses and other taxable income can matter just as much as base pay.
Forgetting that a small gap can still matter
When ANI is close to £100,000, a relatively modest pension contribution or Gift Aid amount can change the result more than people expect.
Check the ANI number first, then compare pension and bonus scenarios
That gives you the clearest view of whether the taper has started, how much allowance is being lost, and whether you can move the result meaningfully.
Continue reading
Move to the next page that usually matters once the taper is on your radar.
Questions people usually ask
Why do people call it the £100k tax trap?
Because Personal Allowance starts shrinking above £100,000 ANI, which can make extra income feel heavily taxed compared with nearby income bands.
Does the taper use salary or ANI?
It uses adjusted net income, not salary alone.
Can pension contributions help?
Yes. Qualifying gross pension contributions can reduce ANI and sometimes remove the taper problem completely.
| Primary source | How PayPrecise uses it | Link |
|---|---|---|
| Income Tax rates and Personal Allowance | Current taper points for Personal Allowance. | View source |
| Adjusted net income guidance | ANI method used to test the threshold. | View source |
| Gift Aid and pension rules | Relief treatment that can reduce ANI. | View source |
This page is designed to give you a quick, transparent estimate. It is not personal tax advice, and it does not replace checking your exact HMRC position.