{"url":"https://www.telegraph.co.uk/money/tools/the-curse-of-earning-100k/","title":"The curse of earning £100,000","domain":"telegraph.co.uk","imageUrl":"https://images.pexels.com/photos/6863255/pexels-photo-6863255.jpeg?auto=compress&cs=tinysrgb&h=650&w=940","pexelsSearchTerm":"UK tax trap","category":"Politics","language":"en","slug":"15d2ea7e","id":"15d2ea7e-f57e-452e-a099-95430359c1f7","description":"A Telegraph tool shows how UK tax rules make earning over £100,000 leave people worse off than just below due to lost allowances and benefits.","summary":"## TL;DR\n- A Telegraph tool shows how UK tax rules make earning over **£100,000** leave people worse off than just below due to lost allowances and benefits.\n- A record **two million** people will hit this tax trap in the **2026-27** tax year, per HMRC forecasts, facing up to **62%** marginal rates including lost childcare.\n- It creates a disincentive to work more as take-home pay may not rise until **£145,000**, driven by frozen thresholds and wage growth.[[1]](https://www.telegraph.co.uk/money/tools/the-curse-of-earning-100k)[[2]](https://www.facebook.com/TELEGRAPH.CO.UK/posts/once-100000-was-a-symbol-of-success-but-now-it-can-leave-you-worse-offa-record-t/1392443636263598)\n\n## The story at a glance\nThe article by *Telegraph* Deputy Money Editor **Isabelle Fraser** explains why a **£100,000** salary no longer feels rich in the UK, thanks to tax traps like the personal allowance taper and childcare cliff-edges. It features an interactive tool to calculate take-home pay and tipping points. This comes amid HMRC forecasts of a record **two million** people entering the trap in **2026-27**, pushed by rising wages against frozen thresholds.[[1]](https://www.telegraph.co.uk/money/tools/the-curse-of-earning-100k)[[3]](https://www.telegraph.co.uk/authors/i/ip-it/isabelle-fraser)\n\n## Key points\n- Above **£100,000**, the **£12,570** personal allowance tapers by **£1** for every **£2** earned, creating a **60%** effective income tax rate (**62%** with **2%** National Insurance) up to **£125,140**.[[4]](https://www.rathbones.com/en-gb/wealth-management/media-centre/news-and-comment/100k-tax-trap-to-hit-2m-taxpayers)\n- Households lose all tax-free childcare and **30 hours** free childcare if either parent tops **£100,000**, with no taper—just a sudden cut.[[5]](https://www.thp.co.uk/60-percent-tax-trap-guide)\n- For some parents, net income after tax and lost benefits doesn't recover until around **£145,000** or higher, depending on family size and location.[[2]](https://www.facebook.com/TELEGRAPH.CO.UK/posts/once-100000-was-a-symbol-of-success-but-now-it-can-leave-you-worse-offa-record-t/1392443636263598)\n- HMRC expects **two million** in the trap for **2026-27**, up from **1.2 million** five years ago, due to wage growth outpacing frozen bands.[[1]](https://www.telegraph.co.uk/money/tools/the-curse-of-earning-100k)\n- The piece calls this a \"perverse\" disincentive where working harder leaves people worse off, eroding aspiration.[[6]](https://www.facebook.com/TELEGRAPH.CO.UK/posts/-why-a-100000-salary-doesnt-make-you-richa-cocktail-of-unfortunate-laws-that-kic/1393274469513848)\n\n## Details and context\nUK tax rules since 2010 have frozen the **£100,000** personal allowance taper, unchanged despite inflation and pay rises. This means more middle-income earners—doctors, teachers, managers—now face it as salaries climb.\n\nChildcare support adds a sharp cliff: tax-free childcare (up to **£2 per £8** paid) and free hours vanish entirely over **£100,000** per parent. In London, this can cost **£10,000+** per child, pushing the break-even salary to **£145,000-£149,000** for families.[[7]](https://britishprogress.org/reports/rates-and-wrongs-fixing-uk-tax-cliff-edges-and-tap)\n\nThe article promotes a *Telegraph* calculator to input salary, children, and location for personalised net pay and tipping points. It frames this as policy from both main parties creating high marginal rates that discourage effort.[[1]](https://www.telegraph.co.uk/money/tools/the-curse-of-earning-100k)\n\n## Key quotes\n> \"A cocktail of unfortunate laws that kick in when a person earns over £100,000 has led to a perverse situation where working more can actually make you worse off.\"  \n> — *Telegraph* summary[[6]](https://www.facebook.com/TELEGRAPH.CO.UK/posts/-why-a-100000-salary-doesnt-make-you-richa-cocktail-of-unfortunate-laws-that-kic/1393274469513848)\n\n## Why it matters\nFrozen tax thresholds and cliff-edges hit ambition across the UK, pulling more into effective rates higher than top earners face. High earners with families see real take-home drops from lost benefits, prompting some to cap pay or limit work. Watch Budget changes or HMRC updates, though relief seems unlikely soon.[[8]](https://www.telegraph.co.uk/money/tax/income/record-numbers-caught-in-100000-tax-trap)","hashtags":["#uk","#tax","#personal","#allowance","#childcare","#high"],"sources":[{"url":"https://www.telegraph.co.uk/money/tools/the-curse-of-earning-100k/","title":"Original article"},{"url":"https://www.facebook.com/TELEGRAPH.CO.UK/posts/once-100000-was-a-symbol-of-success-but-now-it-can-leave-you-worse-offa-record-t/1392443636263598","title":""},{"url":"https://www.telegraph.co.uk/authors/i/ip-it/isabelle-fraser","title":""},{"url":"https://www.rathbones.com/en-gb/wealth-management/media-centre/news-and-comment/100k-tax-trap-to-hit-2m-taxpayers","title":""},{"url":"https://www.thp.co.uk/60-percent-tax-trap-guide","title":""},{"url":"https://www.facebook.com/TELEGRAPH.CO.UK/posts/-why-a-100000-salary-doesnt-make-you-richa-cocktail-of-unfortunate-laws-that-kic/1393274469513848","title":""},{"url":"https://britishprogress.org/reports/rates-and-wrongs-fixing-uk-tax-cliff-edges-and-tap","title":""},{"url":"https://www.telegraph.co.uk/money/tax/income/record-numbers-caught-in-100000-tax-trap","title":""}],"viewCount":2,"publishedAt":"2026-04-15T07:39:10.601Z","createdAt":"2026-04-15T07:39:10.601Z","articlePublishedAt":"2026-04-12T00:00:00.000Z"}