Let's be real - nothing stings quite like working your backside off to hit that £100k salary... only to watch HMRC swipe 60p of every extra £1 you earn. I learned this the hard way when my side hustle pushed me over the threshold last year. After paying £8k more in tax than expected (yes, I cried a bit), I became obsessed with finding legal ways to keep more of my cash. Here's everything I wish I'd known earlier.
1. Why £100k-£125k is the UK's Worst Salary Bracket
Between £100k-£125k, you effectively pay 60% tax because:
You lose your £12,570 tax-free allowance at £1 for every £2 over £100k
Plus 40% income tax
Plus 2% National Insurance
Example: Earn £110k? You'll pay £4k more tax than someone on £99k. Madness.
2. Pension Magic: The Easiest £10k+ Tax Save
I now shovel £30k/year into my pension. Why? Because:
Every £1 you contribute only "costs" you 40p after tax relief
A £10k pension contribution can save you £6k in tax instantly
You can backdate unused allowance from past 3 years
Pro tip: Set up salary sacrifice through work if possible - saves NI too.
3. The Childcare Voucher Comeback (Yes, Really)
If you've got kids under 12:
New 2024 rules let you pay £2k/year into tax-free childcare accounts
For higher earners, this is £900/year saved per child
Works alongside free nursery hours
I missed this last year - don't be like me.
4. Charity Giving That Pays You Back
Donate £10k to charity? You can:
Get 40% tax relief through Gift Aid
Claim another 20% through self-assessment
Effectively costs you just £4,800 out of pocket
Bonus: Some employers match donations - free money!
5. Electric Company Cars: A Loophole Too Good?
My neighbour pays £0 benefit-in-kind tax on his £50k Tesla because:
EVs are taxed at just 2% of value until 2025
Saves him £8k/year vs a petrol car
Includes free charging at work
Downside: You need an employer willing to play ball.
6. Side Hustles? Set Up a Ltd Company
Once my freelance income hit £20k, I incorporated because:
Corporation tax is 19-25% vs 60% personal tax
Can leave profits in the company until you're under £100k
More expense claims (legitimate ones!)
Warning: Accountants cost £1k+/year but save multiples of that.
7. The Nuclear Option: Just Earn Less
Seriously. I know consultants who:
Take unpaid leave to stay under £100k
Delay invoices to next tax year
Negotiate benefits over salary increases
Sometimes working less is the smartest move.
My 2025 Tax Avoidance Routine
Max out pension (£60k allowance this year)
Use all tax-free childcare (£2k per kid)
Ltd company for side income
EV through work scheme
Charitable giving up to £10k
Final Thought
The system's rigged, but you can fight back. Last year I clawed back £14k using these tricks. Could you?