Could you actually be better off earning £99k instead of £150k?

Surprisingly, yes.

If that sounds counterintuitive, welcome to the curious world of UK marginal tax rates and benefit cliff edges.

Once your income passes £100,000, your personal allowance starts to disappear — for every £2 earned over the threshold, you lose £1 of your tax-free allowance. This creates an effective 60% marginal tax rate between £100,000 and £125,140.

That’s already painful — but it gets worse.

If you have young children in nursery, earning just over £100k could also mean losing access to the government’s new childcare support schemes.

The financial impact depends on your childcare costs, but for many London families with two children in nursery, you might need to earn £150k+ just to be no worse off after losing your personal allowance and paying full childcare costs out of pocket.

According to Tax Policy Associates, in extreme cases, the effective marginal tax rate on income just above £100k can reach an eye-watering 2,000%.

It’s a striking example of how a seemingly positive career move can unintentionally harm your finances — unless you plan ahead.

This underlines why financial planning is about more than just your salary. By taking proactive steps, such as increasing pension contributions, you can reduce your adjusted net income and avoid falling into these costly traps.

Ultimately, financial success isn’t just about what you earn — it’s about what you keep, and how effectively you make your money work for you.