It's a bit of a mess in our tax system that causes this.
The highest official tax bracket is 45%[0], which comes into effect once you earn over £150,000.
The "higher" rate bracket is from ~£50,000 to £150,000, HOWEVER:
Once you reach £100,000, your tax-free personal allowance is reduced by £1 for every £2 you earn, so that bottom section of your earnings enter into the 20% bracket when they were 0% previously, so effectively you're marginally taxed 60% (40% + 20%) on your earnings between £100,000 and £125,140.
Between £125,140 and £150,000 you're back at 40%! Anything over £150,000 is taxed at 45%.
Also, if you're (un)fortunate enough to be a parent with young children and you benefit from tax-free child care[1] (to which pretty much everyone is entitled), the second you earn a penny over £100,000 (after pension deductions, but before tax etc) you lose the ~£2000 per child annual benefit.
Effectively this means that if any one parent in a household gets a pay rise from £100,000 to £100,000.01 (ignoring the pensions contributions for a moment), they are actually ~£2000 per child worse off. These people are therefore better off earning £100,000 than £100,000 + (£2000*N) where N is the number of children at tax-free childcare age, until their children age out of the benefit.
In case that's not enough; the moment you earned that extra 1p over £100,000, you're now obligated to start filing tax returns, even if you're a PAYE employee never having done so before [2].
[0] https://www.gov.uk/income-tax-rates
[1] https://www.gov.uk/tax-free-childcare
[2] https://www.gov.uk/income-tax-rates/income-over-100000
The highest official tax bracket is 45%[0], which comes into effect once you earn over £150,000.
The "higher" rate bracket is from ~£50,000 to £150,000, HOWEVER:
Once you reach £100,000, your tax-free personal allowance is reduced by £1 for every £2 you earn, so that bottom section of your earnings enter into the 20% bracket when they were 0% previously, so effectively you're marginally taxed 60% (40% + 20%) on your earnings between £100,000 and £125,140.
Between £125,140 and £150,000 you're back at 40%! Anything over £150,000 is taxed at 45%.
Also, if you're (un)fortunate enough to be a parent with young children and you benefit from tax-free child care[1] (to which pretty much everyone is entitled), the second you earn a penny over £100,000 (after pension deductions, but before tax etc) you lose the ~£2000 per child annual benefit.
Effectively this means that if any one parent in a household gets a pay rise from £100,000 to £100,000.01 (ignoring the pensions contributions for a moment), they are actually ~£2000 per child worse off. These people are therefore better off earning £100,000 than £100,000 + (£2000*N) where N is the number of children at tax-free childcare age, until their children age out of the benefit.
In case that's not enough; the moment you earned that extra 1p over £100,000, you're now obligated to start filing tax returns, even if you're a PAYE employee never having done so before [2].
[0] https://www.gov.uk/income-tax-rates [1] https://www.gov.uk/tax-free-childcare [2] https://www.gov.uk/income-tax-rates/income-over-100000