It is about adjusted net income, not salary
The line is drawn on adjusted net income: your taxable income from every source (salary, bonus, taxable benefits, rent, interest and dividends, all of which count even within the savings and dividend allowances) less gross pension contributions and Gift Aid with the basic-rate tax added back. Salary sacrifice is already out of your pay, so it never counts. Two people on the same salary can sit on opposite sides of the line because one pays more into a pension.
The taper: 60% on each extra £1
Above £100,000 of adjusted net income you lose £1 of personal allowance for every £2 over. That £1 of allowance was sheltering income from the 40% higher rate, so each extra £2 is taxed on itself at 40% and makes £1 more taxable at 40%: 60% of the extra £2 in all. The allowance is gone at £125,140, which is also where the 45% additional rate starts, so the rate falls from 60% to that. Add 2% National Insurance and the zone costs 62%; with a Plan 2 student loan at 9% it is 71%.
At £110,000 with no pension, our calculator puts the marginal rate at 62%: you keep 38p of each extra £1.
The cliffs at £100,000
Two kinds of childcare support stop dead at the line, and they can be worth more than the tax. Tax-Free Childcare adds £2 for every £8 you pay in to a registered provider, a fifth of the bill, up to £2,000 a child a year (double for a disabled child). The funded hours for working parents in England give 30 hours a week in term time from 9 months to school age (3 to 4 year olds keep 15 of those hours whatever their parents earn). Both need each parent's expected adjusted net income to be £100,000 or less, checked every 3 months. A £1 overshoot loses all of it for that quarter; a contribution that lands you exactly on £100,000 keeps it.
Further down, the High Income Child Benefit Charge claws back 1% of Child Benefit for every £200 of adjusted net income over £60,000, all of it at £80,000. Above £80,000 nothing changes until you get back under it.
What a pension contribution does
Every contribution method lowers adjusted net income £1 for £1 gross, so the contribution that reaches the line is exactly what you are over it by. The methods differ in what else they save. Salary sacrifice lowers your pay before tax, NI and student loan deductions, so it saves all three. A net pay arrangement lowers taxable pay only. Relief at source comes out of take-home at 80% with the scheme adding basic-rate relief, and you claim the rest from HMRC. A bonus sacrifice puts the bonus straight into the pension on its payday, which also stops it tipping your expected income over the line mid-year.
Worked example from our calculator: at £110,000 with no pension, £10,000 by salary sacrifice brings adjusted net income to £100,000. Take-home falls by £3,800 and the pension gains £10,000: each £1 in costs 38p. With a Plan 2 loan the cost is 29p, because repayments fall too, though the loan then runs longer if you would have cleared it. Add childcare support and the year can come out ahead in cash, not just in the pension.
What a contribution costs you
The money is locked away until at least 55 (57 from 2028), so it is not available this year. Above the pension annual allowance of £60,000, with no unused allowance from earlier years, the tax relief is clawed back. Salary sacrifice lowers contractual pay, which some employers use for death-in-service cover, maternity pay or bonuses. And a lower student loan repayment is a gain only if the loan would never have been cleared; if it would, the loan runs longer and costs more interest. The calculator works each of these out for your figures; whether to act on them is your call.
Try the £100k tax trap calculator
Sources
Income tax and National Insurance
Pensions
Child Benefit and childcare
We checked every figure against these pages between 19 and 20 October 2026.
The worked figures in this article come from the same calculations as the calculator.