The public sector workers at risk of the £100,000 income tax trap

Senior public sector workers, including hospital consultants, senior nurses, head teachers, police officers and military personnel, are on course to cross Britain's £100,000 tax threshold by 2030, according to analysis by IG.

Workers who cross £100,000 in income lose £1 of tax-free personal allowance for every £2 earned above that level. This creates an effective marginal income tax rate of 60% on income between £100,000 and £125,140, against a 45% rate paid on earnings above £125,140.

The £100,000 threshold has remained frozen since 2010. IG's earlier analysis estimates it would stand at around £160,000 today had it risen in line with inflation.

Newly appointed NHS hospital consultants and senior NHS nurses or managers could be among the first to be affected, with their starting pay projected to cross the threshold in 2027-28, as are military nurses at Lieutenant Colonel rank (or equivalent) and army chaplains at the top of their pay scale.

IG's analysis of the public sector roles and years in which each is projected to cross the threshold, based on published government pay scales, is shown in the table below.

Sources: IG analysis of published government pay scales. Armed Forces' Pay Review Body 55th report 2026; NHS Employers Pay and Conditions Circular (M&D) 1/2026 R2 and Agenda for Change pay scales 2026-27; School Teachers' Pay and Conditions Document 2025; Cabinet Office senior civil service pay framework 2026-27; Home Office circular 2011/2026.

Michael Healy, chief executive of IG Consumer, said: "The £100,000 tax trap is no longer just a problem for the highest earners. It's increasingly catching the very people we rely on to run our hospitals, schools and public services.

"At a time when the government wants more people to invest for the long term, the tax system should be helping people build financial resilience, not making it harder. If we want to create a nation of investors, we need a system that rewards hard work and gives people the confidence and means to save and invest for their future."

IG’s figures account for employee pension contributions, which reduce the income used to test against the threshold. An NHS consultant earning £113,565 would remain below the threshold on this basis, while an army colonel earning £115,881 would already be caught, because the Armed Forces Pension Scheme takes no employee contributions.

Crossing £100,000 in adjusted net income also cuts parents off from additional government-funded childcare hours.

In earlier IG research covering workers earning between £90,000 and £125,000 with nursery-age children, 92% said tax and financial pressure stopped them investing enough to build long-term wealth. Some 54% said they would invest more immediately if losing childcare support at £100,000 were no longer a factor.

"Doctors, head teachers and military officers shouldn't find themselves facing a 60% marginal income tax rate simply because they've worked their way up the career ladder. Yet that's exactly what our outdated tax system is doing. For those with young children, the loss of childcare support makes matters worse, leaving families with less money to invest and build long-term wealth," Healy added.