If you’re a higher-rate taxpayer, defined as those earning between £50,271 and £125,140 annually, you may be hit by a stealthy 60% tax bill.
This is because your personal allowance, which is £12,570 for the 2023/24 tax year, begins to fall when you earn over £100,000.
Essentially, your personal allowance is reduced by £1 for every £2 you earn over £100,000. Once you earn £125,140 or more, your allowance disappears entirely.
Due to the tapering of your personal allowance, every £100 you earn between £100,000 and £125,140 is reduced to £40, as you lose an additional £20 via the reduced allowance.