Practical guide · stated assumptions and checkable examples
UK Personal Allowance taper: why the headline band is not the whole marginal effect
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Source and worked-example review; not professional advice or approval. Examples are synthetic unless explicitly identified otherwise. Follow the cited authority for current eligibility and legal requirements.
The marginal effect of earning another pound can differ from the headline income-tax rate when an allowance is being withdrawn. A transparent worksheet should show the allowance calculation as well as the tax bands.
State the jurisdiction and the tax year
For 2026/27, the standard Personal Allowance is £12,570. Above £100,000 adjusted net income it is reduced by £1 for every £2 of excess income, reaching zero at £125,140. The ordinary non-savings band calculation in this worked example is for England, Wales or Northern Ireland. Scottish non-savings rates and bands are different.
References: HMRC — Rates and thresholds for employers 2026 to 2027
Start at £100,000 in a simplified case
Assume gross income equals adjusted net income, no deductions or other adjustments, ordinary non-savings income only, and the standard allowance. Taxable income is £87,430. With £37,700 at 20% and the remaining £49,730 at 40%, modeled income tax is £27,432. National Insurance and all other deductions are outside this example.
Calculation: Personal Allowance = max(0, 12,570 − max(0, adjusted net income − 100,000) / 2)
Then change only the income to £110,000
The allowance falls to £7,570 and taxable income rises to £102,430. Tax is £7,540 on the first £37,700 plus £25,892 on the remaining £64,730, totalling £33,432. The £10,000 income increase therefore adds £6,000 of modeled income tax. The extra effect comes from both the new income and the loss of £5,000 of allowance; it is not a separate universal 60% statutory band.
Adjusted net income is an input, not a guessed synonym
The simplified example equates adjusted net income with the stated income only to expose the arithmetic. In a real case, the relevant definition and adjustments must be established. Do not alter an arbitrary deductions field until a preferred result appears. Keep documentary support for adjustments and check how a particular payment affects the applicable measure.
Do not extend the result to every tax or every nation
The £6,000 difference is an income-tax result for the defined scenario. It excludes National Insurance, student loans, benefits interactions and other circumstances. The UK employer thresholds also describe payroll components separately. A cross-country comparison should align the income type and year, rather than importing this example into the Irish system or treating Scotland as the same band schedule.
References: HMRC — Rates and thresholds for employers 2026 to 2027; Revenue Ireland — Income tax relief and rate charts
Questions about this guide
Is 60% the official rate on all UK income above £100,000?
No. It is the effective income-tax effect in the defined allowance-taper scenario. Jurisdiction, income type and other circumstances matter.
Is the £110,000 example a take-home-pay calculation?
No. It calculates modeled income tax only. Payroll contributions, student loans and other deductions have not been subtracted.