Pension on a £100,000 salary — the 60% tax cliff.
What pension can a £100,000 salary build? Why pension contributions between £100k and £125k get 60% effective tax relief — and how to use it.
£100,000 is the most consequential salary band in the UK income tax system. From £100k upward, you start losing your personal allowance at £1 for every £2 of income — meaning the effective marginal tax rate between £100,000 and £125,140 is 60% (40% income tax + £1 of allowance lost per £2 = effectively 60%). Add 2% NI and that's 62% combined. Every £1 of pension contribution above the £100k threshold therefore saves you 62p in tax and NI. A £25,140 pension contribution from a £125,140 salary brings you back to the £100k threshold and saves you around £15,000 in tax and NI. This is genuinely the most tax-efficient pension contribution any UK worker can make. If you earn anywhere near this band, the 60% relief opportunity should be the absolute first thing you discuss with your accountant — most people simply don't realise how big it is.