Methodology

The trap

Once your income passes £100,000, HMRC removes £1 of your tax-free personal allowance for every £2 you earn. By £125,140 the whole allowance is gone. Across that band, part of your income is taxed at roughly 60%, far more than the headline higher rate. This tool calculates how a pension contribution restores the allowance and lowers that rate.

What we calculate

From your income, we work out how much of it falls in the trap, the contribution needed to bring your adjusted net income back to £100,000, the tax relief that contribution earns, its real cost after relief, and the effect on your take-home pay and projected pot.

The figures we use

• Personal allowance: £12,570, tapered between £100,000 and £125,140.
• Basic-rate band: £37,700.
• Higher-rate threshold: £50,270. Additional rate: above £125,140.
• Dividends: taxed at 10.75% (basic), 35.75% (higher) and 39.35% (additional), after a £500 allowance.
• Savings and rental profit: taxed at the normal 20/40/45% rates for this year. The separate higher rates announced for savings and property income take effect from April 2027, so they don't apply to 2026/27.
• Personal Savings Allowance: £500 for higher-rate taxpayers, nil above £125,140.
• National Insurance: Class 1 (8% then 2%) for employed income, Class 4 (6% then 2%) for self-employment profit. Take-home includes it. Pension contributions reduce Income Tax but not National Insurance.
• Pension annual allowance: £60,000. Tax relief applies up to this limit and up to your earnings. Anything you pay above it gets no relief. We don't model carry-forward of unused allowance from earlier years, or the tax charge on contributions above the limit.

These are 2026/27 rates for England, Wales and Northern Ireland. The personal allowance and income tax thresholds are frozen until April 2031.

Rates last updated: Autumn Budget 2025 (26 November 2025).

What we assume

We assume your income is employment salary or self-employment profit, both of which count as relevant UK earnings for pension tax relief. You tell us how you contribute, and we model it accordingly: relief at source, net pay, or salary sacrifice. Salary sacrifice also saves National Insurance, which we include. Projected pot figures assume 5% growth a year and are illustrative, not a forecast.

What we don't cover yet

We don't yet model company directors who take income as dividends from a company they own. The rules for that are different: personal pension relief is capped at your earnings, not your total income, and the escape usually has to come from a company contribution. We screen those cases out rather than show a figure we can't stand behind. Scottish taxpayers are not covered, as Scotland sets its own income tax bands.

This isn't financial advice

HiddenWay is an information tool, not a financial adviser. The figures are estimates to help you understand your position, not a recommendation to act. Pension and tax decisions depend on your full circumstances. Speak to a qualified adviser or accountant before making a contribution.

Questions

If something here looks wrong, tell us: hiddenwayapp@gmail.com. Getting the numbers right is the point.