Why £100k creates a 60% marginal rate
Everyone gets a tax-free Personal Allowance (£12,570 in 2025/26). Once your adjusted net income passes £100,000, that allowance is reduced by £1 for every £2 you earn above £100,000 — so it's fully gone by £125,140.
The effect is brutal in that band: on each extra £1 you pay 40% higher-rate tax AND lose 50p of allowance (which is itself taxed at 40% = another 20p). That's an effective 60% marginal rate on income between £100,000 and £125,140 — higher than the 45% additional rate that applies above it.
It also costs parents free childcare
If either parent's adjusted net income exceeds £100,000, the household loses 15–30 hours of funded childcare and tax-free childcare. For a family using full-time nursery, that can be worth thousands of pounds a year — so crossing £100,000 by a small amount can leave you worse off overall.
How to escape it: pension salary sacrifice
Adjusted net income is your income AFTER pension contributions made by salary sacrifice (and Gift Aid). So sacrificing enough salary into your pension to bring adjusted net income back to £100,000 reclaims the full Personal Allowance and the childcare support — meaning the contribution effectively costs you far less than face value.
Example: on £110,000, sacrificing £10,000 into a pension brings you back to £100,000. You avoid the 60% band on that £10,000, so a large part of the contribution is funded by the tax and National Insurance you no longer pay.