Is your income over £100,000?
20/06/2024

If you earn over £100,000 in any tax year your personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This means that any taxable receipt that takes your income over £100,000 will result in a reduction in personal tax allowances that would reduce the allowance to zero if your adjusted net income is £125,140 or above.

Your adjusted net income is your total taxable income before any personal allowances, less certain tax reliefs such as trading losses, certain charitable donations and pension contributions.

For the current tax year, if your adjusted net income is likely to fall between £100,000 and £125,140 you would pay an effective marginal rate of tax of 60% as your £12,570 tax-free personal allowance is gradually withdrawn.

If your income sits within this band you should consider if there are any planning opportunities to avoid this personal allowance trap by reducing your income below to £100,000. This can include giving gifts to charity, increasing pension contributions and participating in certain investment schemes.

A higher rate or additional rate taxpayer who wanted to reduce their tax bill could make a gift to charity in the current tax year and then elect to carry back the contribution to 2023-24. A request to carry back the donation must be made before or at the same time as the 2023-24 self-assessment return is completed i.e., by 31 January 2025.


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We are chartered accountants and registered auditors established in 1946, we have been based in Staplefield near Haywards Heath since 2004. With a client base throughout the southeast, our location is the focal point between Crawley, Horsham and Haywards Heath and Brighton.

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The information contained on this website is provided by Carter Nicholls Ltd for general guidance and is aimed to offer the user general information only. Before making any decision or taking action, you should seek professional advice from a professional from Carter Nicholls or another qualified professional.

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Carter Nicholls Limited
Victoria House, Stanbridge Park, Staplefield Lane
Staplefield
West Sussex
RH17 6AS

info@carternicholls.co.uk
01444 401440

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