Threshold starts at £100,000 adjusted net income – income above this triggers the reduction.

Personal allowance reduces by £1 for every £2 over the threshold – so at £125,140, you lose the entire allowance.

Adjusted net income includes all taxable income minus certain reliefs like pension contributions and gift aid.

Pension contributions can reduce your adjusted net income – making strategic contributions can save your allowance.

Marriage allowance is affected – if you lose your personal allowance, you cannot transfer it to your spouse.

Child benefit tax charge interacts with this – high earners may face multiple clawbacks.

Self Assessment reporting is required – you must declare your income accurately on your tax return.

Tax codes may change – HMRC might adjust your tax code if they anticipate you'll lose your allowance.

Planning opportunities exist – such as salary sacrifice or increasing pension contributions to stay below the threshold.

Impact on effective tax rate – losing the allowance can mean paying 60% or more on some income portions.