How to avoid tax over 100k?

How to Keep More of Your Income When Earning Over £100,000

If you earn over £100,000, you're not alone in feeling like a chunk of your income is disappearing. What many don’t realise is that crossing this threshold triggers a hidden tax penalty—your personal allowance is gradually withdrawn, pound for pound, until it's gone at £125,140. This means that between £100,000 and £125,140, every extra pound you earn is effectively taxed at a staggering 60%.

That’s right—before National Insurance or other deductions, your marginal tax rate spikes well above the standard 40% higher rate. It’s not a new tax, just a quirk of how the personal allowance tapers. The good news? There are legal, smart ways to keep more of what you earn.

One of the most effective strategies is making pension contributions. Since pension contributions reduce your taxable income, they can bring your adjusted net income back under the £100,000 threshold, preserving your personal allowance. For example, if you earn £110,000, contributing just £5,000 to your pension could restore part of your allowance and save you over £1,000 in income tax.

And it's not just about pensions. Other tax-efficient options include using your full ISA allowance, claiming legitimate business expenses (if self-employed), or making charitable donations through Gift Aid. But pensions remain the most powerful tool, especially if your employer offers matching contributions—essentially free money on top of tax relief.

Planning ahead is key. The earlier you act, the more control you have over your tax bill. Rather than waiting for tax season, consider speaking to a financial advisor or using pension contributions strategically throughout the year. At the end of the day, it's not just about earning over £100,000—it's about keeping as much of it as possible.