Anatomy of the £100k Personal Allowance trap
Once your adjusted net income crosses £100,000, HMRC begins
clawing back your £12,570 Personal Allowance at the rate
of £1 lost for every £2 earned — the so-called
2:1 taper. By the time gross income reaches £125,140, the
allowance is fully extinguished. The mechanic is what produces the
trap's hidden 60% effective marginal rate: each extra £1 of pay attracts
the standard 40% higher rate and drags away 50p of previously sheltered
allowance, which is then taxed at the same 40%.
Add the 2% upper-rate Class 1 NI that applies above the £50,270 Upper
Earnings Limit and the bare-bones trap marginal lands at 62% — already painful before any student-loan layer enters the picture.
Stacking student loans on the trap
Repayment thresholds for the active UK student-loan plans sit well below
the £100k taper window. By the time you're inside the trap, every active
plan is already taking its slice. The visualizer above respects HMRC's
"at most one undergraduate plan" rule (Plan 1, 2, 4 or 5 are mutually
exclusive per borrower) and lets you layer the Postgraduate Loan
concurrently — exactly how UK payroll software processes the deductions
in practice.
- Plan 2 + Postgraduate Loan: the headline
77% cliff. The 2026/27 thresholds (£29,385 and
£21,000) are both well below the £100k taper start, so by
the time the taper engages both deductions are running flat against
your gross. The combined effective rate inside the trap window: 60%
taper + 2% NI + 9% Plan 2 + 6% PGL = 77%. From every additional £1 of contractual gross, HMRC strips 77p
before you ever see it.
- Plan 5 only: 60% taper + 2% NI + 9% Plan
5 = 71%. The undergraduate-only variant of the trap still forfeits more
than seven pounds out of ten.
- No undergraduate loan, PGL only: 60% taper
+ 2% NI + 6% PGL = 68%. Common for career-switchers who paid off (or were
grant-funded through) their undergraduate degree but carried a postgraduate
balance into work.
Why salary sacrifice is the cleanest escape
Salary sacrifice reduces your contractual gross before any payroll
math runs. Sacrifice enough to drop your taxable income back under £100,000
and the full £12,570 allowance is restored, the 40% slice
on the recovered allowance vanishes, and the student-loan deductions shrink
in tandem because their thresholds bite on the post-sacrifice number too.
The leverage is exceptional: each £1 sacrificed inside the trap typically
buys back substantially more than £1 of marginal tax + NI + loan deduction
— the visualizer's "Trap neutralised" prose layer quotes the precise pence
saved for your current scenario.
The same logic works in reverse: if you receive a bonus or pay rise that
pulls taxable income just into the trap window, a matching sacrifice
top-up can keep your effective marginal rate at 42% rather than the 62%
(or worse) the trap would otherwise impose.
Scotland: the same trap, in a different shape
Scottish taxpayers face the same £100k → £125,140 Personal Allowance
taper (income tax bands diverge by region but the allowance is UK-wide).
However, because Scotland's Advanced Rate sits at 45%, the 50p of
clawed-back allowance is re-taxed at 45% rather than the rUK 40% —
producing a 67.5% income-tax marginal inside the trap, against rUK's
60%. Add the same 2% NI and the same student-loan layers and Scottish
trap marginals run two-and-a-half percentage points higher across the
board. The companion guide on Scotland's 67.5% trap unpacks the
band-walking math in detail.