Personal Allowance Taper Calculator UK 2026
Find out exactly how much personal allowance you lose when your income exceeds £100,000, what it costs you in extra tax, and how much you could save with pension contributions or Gift Aid. This calculator works out your adjusted net income and models the 60% effective rate trap - pair it with our pension contribution calculator to plan your way out.
Key Facts 2025/26
Who Should Use This Calculator?
Employees Near £100k
If your salary or total package sits between £95,000 and £130,000, this calculator shows exactly how much allowance you lose and whether a salary sacrifice pension arrangement is worthwhile.
Bonus Earners
A one-off bonus can push your adjusted net income into the trap zone. Use our bonus tax calculator alongside this tool to model the full impact before you receive payment.
Directors and Contractors
If you take salary plus dividends, both count towards your adjusted net income. This calculator helps you find the optimal split to avoid the taper or minimise its impact.
Child Benefit Recipients
The High Income Child Benefit Charge kicks in at £60,000 adjusted net income - well below the personal allowance taper. This calculator flags both thresholds so you can plan for both charges together.
Calculate Your Personal Allowance Taper
How the Personal Allowance Taper Calculator Works
Enter Your Total Income
Include all taxable income: salary, bonus, dividends, rental income, and savings interest. The taper is based on everything that counts towards your adjusted net income.
Add Any Deductions
Enter pension contributions and Gift Aid donations. These reduce your adjusted net income and can restore some or all of your personal allowance, cutting your tax bill significantly.
We Calculate the Taper
The calculator follows HMRC's exact formula: reduce personal allowance by £1 for every £2 of adjusted net income above £100,000. Grossed-up pension and Gift Aid amounts are applied first.
See Savings and Options
View your remaining allowance, the extra tax caused by the taper, and a precise figure for how much pension contribution or Gift Aid is needed to fully exit the 60% trap.
Understanding the Personal Allowance Taper in 2025/26
Every UK taxpayer has a personal allowance - a tax-free slice of income. In 2025/26, that figure is £12,570. Once your adjusted net income exceeds £100,000, HMRC removes £1 of that allowance for every £2 earned above the threshold. At £125,140, the allowance is gone entirely. The allowance will remain frozen at £12,570 until at least April 2031, meaning the trap will affect more earners each year as wages rise.
This creates an effective 60% marginal tax rate on income between £100,000 and £125,140. You pay 40% income tax on the income itself, and the other 20% comes from losing the tax-free allowance on income that would otherwise be untaxed. If you received a bonus that pushed you into this range, check our bonus tax calculator to see the full cost.
What Is Adjusted Net Income?
Adjusted net income is not simply your salary. It starts with your total taxable income (employment, self-employment, rental, dividends, savings) minus trading losses and gross pension contributions paid without tax relief. Then Gift Aid donations are grossed up and deducted: a £1,000 donation reduces adjusted net income by £1,250. Understanding this figure is the key to managing the taper. See our take-home tax calculator to model your full position.
The Most Effective Ways to Reduce Your Adjusted Net Income
| Method | How It Reduces ANI | Example Saving | Annual Limit |
|---|---|---|---|
| Pension Contribution (salary sacrifice) | Reduces gross income before tax | £10,000 saves ~£6,000 in tax | £60,000 (annual allowance) |
| Pension Contribution (relief at source) | Grossed-up amount deducted from ANI | £8,000 paid = £10,000 off ANI | £60,000 (annual allowance) |
| Gift Aid Donations | ANI reduced by amount x 1.25 | £4,000 paid = £5,000 off ANI | No upper limit (must be taxpayer) |
| Trading Losses | Deducted from net income | Depends on loss amount | Subject to anti-avoidance rules |
Child Benefit and the £60,000 Threshold
The High Income Child Benefit Charge (HICBC) is a separate but related issue. If your adjusted net income exceeds £60,000, you begin repaying Child Benefit through your tax return - at 1% of the benefit per £200 of income above £60,000. At £80,000 adjusted net income, the full benefit is clawed back. This means earners between £60,000 and £80,000 face a third hidden effective rate on top of their standard income tax.
💡 Planning Tip for 2025/26
If your adjusted net income is between £100,000 and £125,140, making pension contributions is one of the most tax-efficient steps available to any UK earner. Every £2 of pension contribution reduces adjusted net income by £2 (salary sacrifice) or effectively £2.50 (relief at source), and can recover up to 60p of every £1 contributed in effective tax savings. Use our pension contribution calculator to model exact figures.
Real Personal Allowance Taper Examples 2025/26
Scenario 1: Manager with Bonus, No Planning
Person: James, Operations Director, London
Situation: Base salary £90,000, annual bonus £20,000, no pension contributions entered, no Gift Aid
Total Gross Income: £110,000
Adjusted Net Income: £110,000
Income above £100,000: £10,000
Personal Allowance Lost: £5,000 (£10,000 / 2)
Remaining Allowance: £7,570
Extra Tax from Taper: £2,000 (£5,000 x 40%)
Effective Rate on £100k-£110k: 60%
James pays £6,000 tax on his £10,000 bonus (40% income tax + 20% lost allowance = 60%). A £10,000 pension contribution would restore his full allowance and save him £2,000, making the net pension cost just £4,000. See the salary increase calculator to compare job offers at this level.
Scenario 2: Director with Pension Planning
Person: Priya, Finance Director, Manchester
Situation: Total income £118,000, pension contribution £18,000 (relief at source), Gift Aid donations £2,000
Total Gross Income: £118,000
Less Grossed-up Pension: £18,000 x 1.25 = £22,500
Less Grossed-up Gift Aid: £2,000 x 1.25 = £2,500
Adjusted Net Income: £93,000
Personal Allowance Retained: Full £12,570
Tax Saved vs. No Planning: ~£9,028
Priya's combined pension and Gift Aid planning brings her adjusted net income below £100,000, restoring her full personal allowance. Her total outlay (pension + charity) was £20,000 but she saved over £9,000 in tax - an effective pension contribution rate of 60%. Use our PAYE tax breakdown calculator to verify your payslip reflects this correctly.
Scenario 3: Contractor with Salary + Dividends
Person: Tom, IT Contractor, Leeds
Situation: Salary £50,000, dividends £75,000, no pension contributions, 2 children receiving Child Benefit
Total Gross Income: £125,000
Adjusted Net Income: £125,000
Personal Allowance Lost: Full £12,570
Extra Tax from Full Taper: £5,028 (£12,570 x 40%)
HICBC (2 children): Full clawback - £2,212.60/yr benefit lost
Pension needed to exit trap: £25,000 (grossed up)
Tom sits at the top of the 60% trap and loses all personal allowance plus all Child Benefit. A £20,000 pension contribution (grossed up to £25,000) would restore his full allowance, saving £5,028 in income tax, plus recovering the Child Benefit charge. Compare options using our sole trader vs. limited company calculator.
Frequently Asked Questions
What is the personal allowance taper and how does it work?
The personal allowance taper reduces your tax-free allowance by £1 for every £2 of adjusted net income above £100,000. The standard allowance is £12,570. Once your adjusted net income hits £125,140, the allowance reaches zero and you pay tax on all income from the first pound.
What is adjusted net income and how do I calculate it?
Adjusted net income starts with all your taxable income (salary, bonus, rental, dividends, savings interest) and subtracts: pension contributions paid gross, the grossed-up value of Gift Aid donations (amount x 1.25), and any qualifying trading losses. This is the figure HMRC uses - not just your salary.
Why is the effective tax rate 60% between £100,000 and £125,140?
For every £2 earned in this range, you pay 40% income tax (80p) and also lose £1 of personal allowance. That lost allowance would have been tax-free, but now gets taxed at 40%, costing another 40p. Total cost: £1.20 in tax on every £2 earned - an effective rate of 60%.
How much pension contribution do I need to escape the trap?
You need to reduce your adjusted net income to below £100,000. For a relief-at-source pension, divide the amount by which your adjusted net income exceeds £100,000 by 1.25 to get the net contribution needed. For example, if your adjusted net income is £110,000, you need to pay £8,000 net (which grosses up to £10,000) to bring it to exactly £100,000. This calculator works this out for you automatically.
Do dividends count towards the taper?
Yes. Dividends are taxable income and are included in your adjusted net income calculation. If you are a director receiving a mix of salary and dividends, both totals are combined when assessing whether you are in the taper zone. You cannot separate them to avoid the taper.
Does the taper affect my Self Assessment tax return?
Yes. If your adjusted net income exceeds £100,000, HMRC requires you to file a Self Assessment return. Your tax code may also be amended by HMRC mid-year if they expect your income to exceed the threshold, which affects your monthly PAYE deductions. Check our tax code checker if your code has recently changed.
Is the taper the same for Scottish taxpayers?
The personal allowance taper thresholds are set by HMRC and apply equally to all UK taxpayers, including Scotland. However, Scottish taxpayers pay different income tax rates on the income itself. The effective rate in the trap zone is higher in Scotland because the Higher Rate is 42% rather than 40%, creating a 63% effective rate (42% + half of 42%) on income between £100,000 and £125,140.
Will the taper thresholds change in 2026/27?
No. The £100,000 start point and £125,140 full-taper point are unchanged for 2026/27. The personal allowance itself remains frozen at £12,570 until at least April 2031. As pay rises continue, more earners will fall into the trap zone each year - a process known as fiscal drag. Use the UK salary benchmark tool to see how typical salaries are trending.
Data Sources and Accuracy
This calculator uses official UK government figures for 2025/26 and 2026/27:
- Personal Allowance Taper Rules: HMRC - Income Tax rates and Personal Allowances (GOV.UK)
- Adjusted Net Income Calculation: HMRC - Personal Allowances: adjusted net income (GOV.UK)
- High Income Child Benefit Charge: GOV.UK - High Income Child Benefit Tax Charge
- Gift Aid Relief Rules: GOV.UK - Gift Aid
- Pension Annual Allowance: GOV.UK - Tax on your private pension contributions
- Child Benefit Rates 2025/26: GOV.UK - Child Benefit rates
Calculation Methodology: Adjusted net income is calculated by taking total gross income, deducting gross pension contributions (with grossing-up applied for relief-at-source schemes), and deducting grossed-up Gift Aid donations (amount x 1.25). The personal allowance is then reduced by £1 per £2 of adjusted net income above £100,000.
Last Updated: February 2026
Disclaimer: This calculator provides estimates for informational purposes only. Your actual tax liability depends on your exact tax code, specific pension scheme rules, HMRC assessment, and individual circumstances. Always verify with HMRC or a qualified tax adviser for decisions involving significant sums.
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