The curse of earning £100,000

TL;DR

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.
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.
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)

The story at a glance

The 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)

Key points

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)
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)
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)
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)
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)

Details and context

UK 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.

Childcare 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)

The 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)

Key quotes

"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."

— 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)

Why it matters

Frozen 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)