A few weeks ago, I was reading an article from The Times exploring the little-known quirks of the UK tax system, a decision that quietly influenced high-altitude professionals across the country.
It examines the increasing number of individuals choosing to build income to avoid scores above £100,000. At first glance, this may sound confronting intuition.
Is it always better to make more money? But what this article reveals – many of us are beginning to understand more clearly that the key points of the past, financial rewards for working hard or taking on greater responsibilities may start to drastically reduce. It was a fascinating and disturbing turn that I came to my mind over the weekend during a discussion with a group of friends.
The conversation isn’t necessarily about salary or taxes, but when we talk about career growth, financial planning, and what people are next, it comes again: the moment of earning more is not always like moving forward.
There is a specific view in the UK income tax system (£100,000) that the rule has changed dramatically. Not only do you start paying 40% tax on any income that exceeds that threshold (as part of a higher interest band), but you also start losing your tax-free personal allowance altogether. For every £2, £1 of your personal allowance is over £100,000.
By the time your income reaches £125,140, it has been completely removed. This creates an effective marginal tax rate with incomes ranging from £100,000 to £125,140. In other words, for every pound added to that band, you will only bring 40p. I realize that for many people, this is a shocking understanding.
Even more surprisingly, this has a psychological impact. As business leaders and professionals, we are often entreated to move forward, do better, take the next step, whether it’s promotions, bigger projects or the form of increased salary. But it pauses when economic incentives are disproportionate to the effort, responsibility and pressure required. Should I say yes to the extra work? Is the reward really worth it?
Perhaps most importantly, will I get worse financially because I do more?
This is especially true with the group now commonly known as Henrys – high-income people, not rich yet. Now I don’t know who this group was growing up on the weekends, but it turns out that these people usually earn between £70,000 and £120,000 and often engage in demanding career roles, raising families, paying mortgages and contributions
What matters is the economy. On paper, they are in good condition. But reality will feel very different. The rising cost of parenting, higher interest rates and upgraded living expenses are squeezing everyone, including this group, which is said to have put many in trouble with ambition and affordability. The £100,000 tax cliff only adds to this stress, creating a kind of ceiling that is sometimes punitive.
This is not just a financial problem; it is also the culture and operation of the company. If we know that employees may be frustrated or discouraged by the way they are taxed
The system will affect their paid salary, what does this mean for retention and progress? Do we inadvertently limit talent growth by failing to recognize the real impact of taxes that exceed the title tax rate? What can employers do to better support their teams to browse these thresholds?
It begins with consciousness. Salary discussions often focus only on total income without considering how tax structures, benefits, student loans and allowances affect real-world outcomes. Employers need to understand that for many professionals, crossing the £100,000 route is not an easy milestone, and it is a turning point. For those who manage compensation, providing a more thoughtful payment package that includes elements such as pension donations, flexible benefits or tax benefits allowances can make significant differences. It’s not just about paying people, it’s about helping them make the most of their income.
As someone who advocates for transparency and sustainability business for most of my career, I find this unsettling. Our tax system should be designed to encourage success, not to stop people from progressing. When individuals start to avoid promotions or additional responsibilities as this will allow them to spend financially, we will move in the wrong direction. I have always believed that whether it is contributed through taxation, employment or innovation, it should be celebrated and supported. However, this contribution must also feel fair and proportionate.
The truth is, the person most affected by this threshold is not super healthy. They are business owners, department heads, consultants and professionals who work long hours, take significant risks and support others around them. Punishing them through overly complex and harsh tax rules will send wrong messages. It says: Stay with you. Don’t stretch. Don’t work hard. This is something we can’t afford financially or socially.
No simple fix. Tax reform is very complicated. Talking about the reality faced by professionals is the first step. We should be able to question systems that no longer serve us and promote smarter, more compassionate frameworks to encourage ambitions, reward responsibilities, and support the middle layers of our workforce, not just the top or bottom.
This is not to avoid taxes or games. It’s about designing a more equitable effort and reward to maintain a healthy proportion without losing money for success. The £100,000 tax trap is just one example of inconsistent policy and life experience. But this is important. For many professionals, whether they realize this or not, they are already shaping decisions, changing career trajectory and redefining what success looks like.
As leaders, we attribute to our teams and ourselves, to understand this impact and to think creatively about how we support ambitions rather than killing it.
