You got the promotion. You're earning 105,000 pounds. You check your pay slip expecting a nice bump.
It's barely more than when you were on 99,000 pounds.
Welcome to the UK's 100k tax trap, the most punishing stretch of the entire tax system, and one that hits software developers disproportionately hard.
The maths that makes you angry
When your income crosses 100,000 pounds, HMRC claws back your 12,570 pound Personal Allowance at a rate of 1 pound for every 2 pounds you earn above the threshold. That income that was previously tax-free? Now taxed at 40%.
Here's what that actually means per pound earned between 100k and 125,140 pounds:
- 40p income tax (higher rate)
- 20p effective tax from losing your personal allowance (50% of 40%)
- 2p National Insurance
Total: 62p of every pound goes to HMRC.
That's a higher marginal rate than someone earning 500,000 pounds (who pays 47%).
A real example: 99k vs 110k
On 99,000 pounds, you keep your full 12,570 pound personal allowance. Take-home after tax and NI: roughly 64,500 pounds.
On 110,000 pounds, you've lost 5,000 pounds of personal allowance. Take-home: roughly 69,200 pounds.
An extra 11,000 pounds gross gives you only 4,700 pounds more in your pocket. The rest, about 6,300 pounds, went to HMRC. That's an effective rate of 57% on that chunk of income.
Why this matters for developers
The average UK software engineer salary is around 55k-65k. Senior engineers and tech leads in London regularly hit 80k-120k. Contractors inside IR35 can easily land in this zone.
If you're a senior dev negotiating a raise from 95k to 110k, you might assume that 15k bump means 9k more take-home. It doesn't. You'd see about 6,400 extra, because 10k of that raise falls in the trap zone.
The fix: salary sacrifice into pension
The most common escape is salary sacrifice. You redirect some of your salary into your workplace pension before tax is applied.
Example: you earn 115,000 pounds and sacrifice 15,000 pounds into pension.
- Your taxable income drops to 100,000 pounds
- Your full personal allowance (12,570 pounds) is restored
- You save approximately 5,000 pounds in income tax you would have lost to the taper
- You save 300 pounds in NI on the sacrificed amount
- Your employer saves 15% NI on the sacrificed amount too (some employers pass this saving to you)
Net cost to you: roughly 9,700 pound reduction in take-home pay, but 15,000 pounds goes into your pension. That's a 54% return before any investment growth.
Should you care?
If you earn between 100,000 and 125,140 pounds: yes, absolutely. The numbers are too large to ignore.
If you're approaching 100k: plan now. Talk to your employer about salary sacrifice before your next pay rise pushes you into the zone.
If you're a contractor: this applies to your deemed salary if you're inside IR35, or your dividends and salary mix if you're running a Ltd company.
Run your own numbers
I built a free 100k tax trap calculator that shows your exact marginal rate and optimal salary sacrifice amount. There's also a salary sacrifice calculator if you want to model different contribution levels.
No signup, no email capture. Just the maths.
All figures based on 2025/26 England/Wales tax rates. Scotland has slightly different bands (42% higher rate) but the personal allowance taper works the same way.
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